IFLR 1000
The Guide to the World's Leading Financial Law Firms

Project finance is not an area that is generating much work for law firms. "There are some project finance deals but it's much slower. The appetite to finance projects is less and banks are very, very choosy and the amount they lend is much lower than before," one partner says.

Nevertheless, it is clear that in the long term there will be an appetite for energy funding, especially in renewable energy, and although "Hungarian legislation is pointing in the opposite way", according to one local partner and has "scared away investors", firms in general are seeing changes in the government's attitude. It has recently been promising further renewable incentives and firms are hopeful looking ahead for biomass and wind projects, and maybe even in hydropower. At the moment however, it's the traditional power sources that dominate the landscape when put in contrast to renewable sources.

Hungary is about 80% dependant on Russian gas and the government is committed to nuclear power to serve its future needs. "Everything which can replace gas; the government decreed on the expansion of the only Hungarian [Nuclear] power plant [and] one serious alternative is nuclear energy," says a partner. "The new government is definitely declaring [energy] independence from the Russians...but the former government realised the problem with Ukraine," the partner adds pointing out that breaking away completely from such a resource rich neighbour is hard to do.

Infrastructure is an area in need. The national airport is one example as it is "not connected to the city properly" says a partner. But the sector will be held back by the government's attitude to public-private partnerships (PPP). "The government does not support PPPs. They've started to buy back their projects [and the] big PPP projects will be bought back," says another. The government has reviewed and revised the current projects and this has made market commentators pessimistic about future mandates. "The government is in a quandary. The current government, they don't like to see key infrastructure assets in foreign ownership. On the other hand, they see the dire need to brave new infrastructure and bring in new money. It's a difficult situation and they're looking at all different types of alternatives," one partner states. The current government is also reticent with regard to privatisation.

The real estate sector has been described as "the deadest of all". Banks are tighter with their funds but are becoming more aggressive because of their country targets. There is hope that this sector will become more active but it will not be as active as energy.

Despite the quandaries that the economic crisis produced, CMS Cameron McKenna has been able to progressively enlarge its team. The 12 strong practice, continues to build market share and the firm has been visible advising on high-profile project finance transactions in Hungary. In other developments, Iván Sefer was recently promoted to partner.

The firm is noted as having excelled in certain sub-categories. "CMS is very strong, perhaps the strongest in the pure representation of banks in project finance," says one peer, adding: "They're not so strong on developer side work. They do very few motorways, PPP projects, but they are the gold standard in banks."

The firm has earned the plaudits of its clients with one saying: "They're one of the best international law firms in international renewable transactions. The energy team is capable". "They are lawyers but had more of a commercial view on what's going on. They're not just looking at the legal aspects but are trying to make the deal happen," says another client.

The firm is very active and has been involved in some big-ticket deals this year. It advised on the financing of a gas drilling project, a biomass project and a shopping centre. Additionally, the firm is known for its cross-border capabilities and has been active in a complex cross-border acquisition financing of an energy efficiency company. Finally, the firm has been advising on the restructuring of a company in a highly publicised, complex and sensitive mandate.

Réczicza White & Case is a solid top tier practice. While it does not wholly excel in any of the project finance sub categories, so as to be the "gold standard", it is well rounded and proficient. Its range of projects includes energy and power plant financings, metals and mining, municipal and wastewater, renewable energy, infrastructure, oil and gas, construction, engineering, transportation and telecommunications.

The firm has represented the Hungarian state in setting up the current legal and regulatory regime, and acted in tenders to award concessions and licenses for projects. It has also advised project sponsors for parties bidding for concessions and multilateral organisations and commercial bank syndicates providing financing for the projects. From competitors and the media, the firm has established recognition for its competency in complicated motorway projects. It is one of only a few firms qualified to handle these complex international project finance deals.

In 2011, the firm was advising Tippin on the €100 million restoration and transformation of a landmark 19th century building into a modern retail and office building. Specifically, this entails advice on the project financing of the redevelopment of the 50,000 square metre building into Class A offices and retail spaces. The firm also advised Mátrai Villamos Muvek Termelo on the €1 billion 500MW Visonta Power Plant project, which was finally aborted.

Despite the low volume of completed project finance transactions in Hungary this year, Allen & Overy is pushing for a place in the top tier. This stems from the strength of the banking and finance team of the firm, which is now two years in from its establishment.

Allen & Overy's Central European banking and finance team is based in the Budapest office and is led by James Graham. It formed in response to clients' need for sophisticated English law advice in banking transactions. "When looking at others, they [A&O] are better because of their network," says one competitor. Other competitors note that the firm is visible in the market.

Across the region, the firm is active with the EBRD (European Bank for Reconstruction & Development) and advised it on its €125 million equity investment in Iberdrola Renovables' wind farm projects in Poland and Hungary. Moreover, it advised BNP Paribas and Raiffeisen Bank International on a €71 million syndicated borrowing base facility for Hungarian Horizon Energy to use to finance the exploration and extraction of oil, gas and other hydrocarbons from Hungarian sites.

Andrékó Kinstellar moves up a tier this year. "The strong banking part of project finance is led by [Csilla] Andrékó and they have a strong energy practice," says a peer. Testament to the visibility of the firm, a partner of a reputable firm listed Kinstellar as a firm they regularly work with.

Andrékó has built herself quite a reputation in Hungary. "In Kinstellar, we would like to emphasise Andrékó for pure banking," says one peer. Additionally, the market now understands that the firm holds a significant portion of energy finance mandates.

The firm gave lender-side advice to Pannon Széleromu on its €16 million 15MW potential capacity wind energy farm. This included drafting and negotiating finance sector specific documentation, a due diligence exercise and advice on specific regulatory rules and limitations. The firm also advised a consortium of banks led by MKB, Deutsche Pfandbriefbank and UniCredit on the €384 million refinancing of West End City Centre (one of the biggest shopping malls in CEE - Central & Eastern Europe).

After a successful year attracting high profile finance and regulatory mandates, Faludi Wolf Theiss consolidates its position in the second tier. Since opening in November 2007, the Budapest office has continued to grow and build market share in an economy, which is still recovering from the recession.

"Wolf Theiss has a strong practice. Perhaps the strongest in pure energy," says one peer, adding: "Their pure energy work is fantastic, but across other categories, infrastructure, banking, it's not so deep." To this end, Zoltán Faludi was drawn out for praise. "In pure energy, Faludi is the top there," one peer says.

On the real estate side, the team advised MKB Bank and OTP Bank as lenders with regard to the €20 million financing of a real estate project to develop an office park in Budapest. The firm also advised OTP Bank in relation to a €10 million acquisition finance deal of two project companies of ALTEO Energiaszolgáltató.

Through separate financing agreements, these subsidiaries purchased two electricity power plants with a capacity of 9MW and 114MW (Gyor power plant) and 10.5MW and 100.5 MW (Sopron power plant) from Eon.

Since Kajtár Takács Hegymegi – Barakonyi Baker & McKenzie's position remained unchallenged, it retains its position in the second tier. However, there have been observations of decreased visibility from market commentators.

When it comes to project finance in its "purest" form, the firm has been relatively inactive. However, this is merely indicative of the state of affairs in the Hungarian market over the last 12 months. On the adoption of a looser definition, we see interesting mandates crop up.

The strength of the firm in cross-border matters was evinced when it represented OTP Bank (the largest Hungarian commercial bank) in relation to the restructuring of the €100 million cross-border financing of Vektra-Jakic Plevlja (a large wood processing company) in Montenegro. This was the most significant restructuring deal of the OTP Group.

The firm also advised JPMorgan Chase with regard to the €247 million financing of a motion picture entitled "The Next Three Days". In relation to the field of film financing, where the firm enjoys high reputation, it advised Commerzbank in connection with the financing of another filming transaction.

In project finance, Siegler Law Office/Weil Gotshal & Manges has had an active year. It is one the stronger firms in the second tier and always gaining ground. "We did important transactions and we see Weil on the other side," one peer says. Another competitor notes that "on the energy side, they have no specialised team."

On the other hand, clients are very satisfied by Siegler Law Office/Weil Gotshal & Manges's efforts. "The proof is in the pudding and we continue to engage them," one says, adding: "We've worked for many years, they know what we expect. They're business oriented. They draw our attention to the business points." Konrád Siegler and David Dederick have been noted by clients as major players.

The firm has been active in representing MKB, OTP, ERSTE and K&H Bank with regard to a €70 million project finance facility to be provided for the purposes of the development and construction of a new 116MW gas-heated power plant with 116M. Built on a greenfield site, it was the first real project finance deal to have taken place in Hungary since the financial crisis.

The firm is also representing MVM in regard to the contemplated €21 million refinancing of HungarowindKft, an MVM subsidiary operating a wind farm in Hungary, and CBS Property in the €30 million refinancing of its entire portfolio of properties in Hungary.

Following the arrivals of Gábor Felsen, Eszter Kamocsay-Berta and István K_vári, Gide Loyrette Nouel (GLN) has significantly restructured the Budapest office's project finance group. Modelled as the regional hub, the Budapest office is well placed to gain new clients and provide advice in the CEE region and in the Balkans.

Following the expiration of LEGO Manufacturing leasing contract in 2015, it has decided to maintain its production base in the city of Nyíregyháza, East-Hungary. GLN is presently assisting LEGO Group in examining the company's alternatives after expiration of a contract.

Hit by the key departures of Gábor Felsen, Eszter Kamocsay-Berta and István K_vári, Lakatos Köves & Partners is battling to maintain its portion of the market and the firm this year moves down. The trouble the firm faces has been a big topic of discussion among market commentators. Despite the losses, the firm has been active this year, especially in the real estate sector, and is involved in some interesting deals. One of these saw the firm advise Walker and Williams Investment Group with regard to the €148 million financing of the development of the Tópark Center. The project is currently one of the largest real estate development projects in Hungary.