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

It would appear that the M&A market in Russia has been in the vanguard of the economy's recovery, getting back to its feet in a big way over the past six, if not the full twelve months. Partners are finally starting to feel they have turned the corner and all are forthcoming as to their positive outlook for the future.

"This time last year I would have said cautiously optimistic - now I would say just plain optimistic," says one partner, while another is just as keen: "The M&A market was the first to recover from crisis really, more strongly than banking definitely."

"This year has been very good. M&A has made a breakthrough compared to other years. The trend is definitely upwards," agrees another practitioner while a third adds: "Very busy indeed. It's been an extremely good year. In terms of revenue it's a dramatic improvement."

Summing up, one active corporate lawyer comments: "2010 has been very good. It's rebounded back a lot faster than I thought it would. 2009 was a dead zone, but we are pulling out of the woods now."

The salient question is how this activity finally got on the upswing, and again partners have varying opinions.

"Basically, a common understanding of pricing came about," explains one partner simply, while another points to political considerations: "Some of this could be put down to pre-election movement. People do try and get deals done before."

One practitioner simply has the view that inertia had been reached and something had to happen: "There is not a huge amount of new money, they are mainly on-balance sheet deals. The players dusted themselves off and got involved. I mean, there's only so long you can stay on the sidelines."

A solid opinion on this is that investment from outside the country had dried up: "The problem was there was a dearth of international investment. It was more consolidation," though this a trend that appears to be reversing now as the market notes that interest from China and India is growing, especially with regard to natural resources.

"I've seen a couple of new trends. One is that more international investment is coming back and there is still a lot of Russia-to-Russia work. Due to the dearth of work firms fixed on Russian market activity," comments one partner, pointing to a continuation of a trend that arose last year.

In terms of legislation, there is some debate among corporate lawyers as to the state of the law in Russia at the moment, on one side people feeling that it is still rather inflexible, while others are insisting it is finally harmonising with other systems.

"There is an increased complexity of deals and Russian law is too rigid for it. It is underdeveloped," says one, while a peer comments: "A lot of shareholder agreements were drafted under English law, using offshore holding structures. Now you can do this direct in Russian law. It is a case of Russian law catching up, and I don't mean that pejoratively, with UK and US law. The law here is definitely more user-friendly now."

The market is also being driven by oil prices and partners are also looking to the mooted state privatisation scheme, though with a wary eye. It could provide a lot of work for firms as investors get involved from outside, but there are some potential issues.

"I do have concerns that the privatisation will go a bit like the old days, with 'friends' buying up these strategic companies and then selling them on. It's not exactly transparent," warns one partner, while another adds: "There is a lack of transparency for these strategic companies anyway."

It is also the case that the foreign acquisition of some of these stakes will be subject to government approval, due to them being deemed 'strategic enterprises' by the Russian government. "The things considered strategic are anything defence-related, obviously, but also natural resources, oil and gas and media – anything potentially sensitive," clarifies a partner.

Overall though, one partner feels that this federal law will not present too much of an obstacle: "It is complicated process, yes. But I feel it's fair enough for the government to do this; it takes know-how to get these things out of the ground, why should all that wealth be taken out of the country? I'm also not sure if the complexity will put people off investing in these strategic enterprises. The people who would do this are usually sophisticated, and can cope with these kinds of processes."

Described by rivals as "really good," possessing a "solid team" and, more concisely, "the best," Linklaters is a tier one powerhouse with a deal flow over the past 12 months that demonstrates its illustrious standing in the market.

The only negative comment from a competitor concerned the perhaps slightly consolidative nature of the firm's corporate practice: "Linklaters tends to have its core clients that it services, they don't go for a lot of new deals," though it doesn't seem to have made a dent in the size of deals the team has completed recently.

One of the largest deals for the team came in the oil sector, advising BP on a strategic share swap. The terms of this deal saw BP swap 5% of itself for 9.8% of Rosneft, in respect of a mooted Arctic survey of the South Kara Sea, a highly prospective section of the Arctic Ocean that has remained undeveloped. The deal is notable for two reasons, first for its size, settling for a value of $7.8 billion, and secondly because it represents the first major equity-linked partnership agreed between an international and national oil company. Partners Stephen Griffin and Grigory Gadzhiev led on this transaction, which completed in early 2011.

Another big deal was led on by department head John Goodwin and leading lawyer Denis Uvarov, who advised PepsiCo as it established itself as the largest food and beverage business in Russia by acquiring a two-thirds stake in Wimm-Bill-Dann, a leading Russian company in the dairy sector. Worth $3.8 billion, the deal completed late 2010, with an expected tender offer for the remaining shares completed in May 2011.

The firm didn't desert its solid domestic practice in this area this year though, as Denis Uvarov again led a team, this time advising Sberbank, in relation to an acquisition of Troika Dialog Group, an active independent investment bank. This ties in with the overall strategy to drive Moscow toward being a major global financial centre, by streamlining the biggest bank and the country's leading investment bank into one package. The deal represents a value of $1 billion, with an earn-out amount to come in 2013.

Client feedback is also consistent in its satisfaction with Linklaters' team, as one comments: "They are excellent in dealing with very complex matters within various jurisdictions. They are very creative and practical in different areas too."

The market doesn't have all that much to say about White & Case, only really meriting a mention to say that, based on deals and visibility, the firm still more than merits its top tier position.

"White & Case definitely deserve to be in tier one," comments a rival partner, while another competitor says: "We do see W&C a lot. They deserve to be up there in the top tier."

Leading lawyer Igor Ostapets led on arguably the firm's highlight deal of the year, advising oil company TNK-BP on its acquisition of Vietnamese and Venezuelan production and pipeline assets from BP. Utilising the White & Case network, including offices in London, Singapore, Miami, Frankfurt and Brussels as well as Moscow, the deal was agreed for $1.8 billion in October 2010.

Moving into this year, fellow leading lawyer and head of practice Eric Michailov took the lead in advising RUSNANO, the Russian Corporation of Nanotechnologies, as it looked to place an investment in to Plastic Logic, the Cambridge-based technology company that are the leaders of the emerging market in plastic electronics, that would give it control of the company. The deal, said to be worth $700 million, completed in January 2011, despite some concerns surrounding the possible transfer of cutting edge technology away from Britain being raised.

The office did make an astute move in recruitment this year in taking on partner Denis Bazlov, who used to work at fellow US firms Cleary Gottlieb Steen & Hamilton and Skadden Arps Slate Meagher & Flom as well as working in-house. He joined officially in March 2011.

"Cleary is good, but are much better in capital markets," comments one competitor, giving voice to a general opinion in the market. However, after strengthening its corporate capability over the past couple of years the firm is starting to see some results, with a handful of rival partners hinting that the firm could soon be moving into the top tier.

This new status is reflected in the firm's deal list for the year, with a pair of multi-billion dollar deals deal representative of the calibre of work this team can act on. The team on the ground in Moscow is led by leading lawyer Scott Senecal and Murat Akuyev, who does corporate work primarily but who is also adept on the markets side too.

It was Akuyev who led the team on the team's undoubted highlight this year, advising Weather Investments on its merger with VimpelCom, the second largest telecommunications company in Russia, which is listed on the NYSE. The deal entailed the raising of a lot of debt as well as the standard merger procedure and as such work is still ongoing. On completion the merger will create the world's fifth-largest telecommunications concern with the transaction representing an overall value of $6.5 billion.

The firm also tapped into the energy sector, with a team led by Paris-based Moscow partner Russell Pollack acting for Gazprom, the largest company in Russia and, globally, the largest producer of natural gas. He and his team were counsel on its sale of interests in other Russian gas companies and related concerns, including the sale of its 51% stake in Severenergia and the sale of $250 million of shareholder loans to Yamal Development. The total value for the sizeable transaction came to $1.85 billion, and it completed in November 2010.

Clifford Chance's M&A team has had a rough year of it, with many in the market of the opinion that the firm cannot honestly maintain a top tier position with the number of people that have left over the past few years and while its visibility on deals remains below that required of a top firm.

"Clifford Chance has taken a whack, with a number of people leaving," says one partner, while another peer echoes the recurring view: "Departures have affected them, and they are stretched."

"I just don't see them on as many deals, they are not a powerhouse. They are a good firm, no question about that, I just don't see them in the same way now," comments a partner. Another corporate practitioner adds: "Clifford Chance do not necessarily merit a top tier place as its Moscow office is not as powerful as before."

Some key talent still remains. Leading lawyer Marc Bartholomy heads the practice in Moscow and is described as "a great guy, a lawyer's lawyer, you can have some fun with him when doing a deal," by one partner.

A portion of the team's work does remain under confidentiality, due to its ongoing nature, but there are some representative deals that show that the firm, despite dropping a tier, isn't necessarily out of the running completely.

This year, partner Nicholas Rees is leading the team advising Brunswick Rail as it looks to acquire a leading rail leasing company. This deal is notable as it is structured as a LBO and will represent one of the first deals of this type done in the Moscow market. With a value of around €340 million, the deal is currently still active, having started in February 2011, and hopes to close later this year.

Another very big deal for the firm is acting for Avtovaz, the largest car manufacturer in Russia, on a joint venture agreement with an alliance of Renault and Nissan. The deal is a strategic one, as it is hoped that it will enable Avtovaz to get access to modern technology that will allow it to compete with global brands. An ancillary benefit is that it will be perceived to be a boost for the Russian automotive market overall, leaving behind the dubious quality of the old Ladas that once epitomised Russian automotive engineering. Arthur Iliev led on this deal and the value remains confidential.

The recent upward trajectory of Herbert Smith's corporate practice seemed to reach its ceiling this year, after a period of sustained growth and visibility finally levelled out. This is not a negative however, as the team retains the respect of its peers in the market and also retains its tier two position. "Herbert Smith has made a lot of progress and has settled down into being a steady firm now," observes one partner. "Herbert Smith is solid in tier two," agrees another.

The firm also shares in another market trend, that of losing important partners. Their loss was Robin Wittering, described as "the team's star" in last year's IFLR1000, who retired to pursue other business interests. "Herbert Smith took a big hit to its practice with Robin Wittering resigning and moving off to the South of France. He's doing other business activities now," comments a partner, though Wittering does remain as a consultant to the Moscow office, so not all his expertise and experience is lost.

The team kept on though, securing some interesting deals over the past 12 months. On one mandate the team received partners Alexei Roudiak and Danila Logofet led the team that advised Yamal Development on its acquisition of a majority 51% participation in Severenergia, an oil and gas concern that owns other companies that possess important development licenses for oil and gas fields in Yamal-Nenets, Russia. Yamal, an evenly split joint venture between Gazprom Neft and Novatek, saw the transaction complete for an approximate value of $1.5 billion in November 2010.

A team led by Oleg Konnov also advised a confidential private investor on the acquisition of a half stake in the National Container Company from FESCO, the number one Russian shipping line. The team also advised on the acquisition finance facility provided by Sberbank in relation to this deal. Representing the largest port transaction in Russia since the Novorossiysk Sea Trade Port IPO in 2007, the deal, worth $900 million, closed in July 2010, settling a dispute between FESCO and First Quantum in the process.

US giant Skadden has a global reputation in corporate work and the firm can boast a respected team in the Russian capital too.

"Skadden is probably right in tier two, and I have worked with Linda Davies, she's definitely worthy of special mention," remarks one partner, while another practitioner comments on the team's efficiency: "Skadden, while having a small team on the ground, have a high per capita rate of good work. They have good people."

Another competitor throws some light on how preparatory work is handled and, by extension, how on-the-ball Skadden is technically: "Skadden is good. Put it this way, if Skadden was opposite me I would spend more time preparing than if it were some of the other firms."

A standout deal for the firm came at the end of 2010, when a team containing leading lawyer Pranav Trivedi advised Altimo Holdings and Investments in connection with its 45% stake in Vimpel Communications in line with VimpelCom's merger with the emerging markets and Italian telecommunications assets of Weather Investments, a private investment instrument that is in turn majority-owned by Egyptian entrepreneur Naguib Sawiris. A long running deal, it completed fully in October 2010 for a sizeable $21.5 billion.

The two leading lawyers also teamed up to advise the state-controlled Russian holding company OAO Svyazninvest, a majority shareholder in numerous regional telecoms companies (RTOCs), in its merger with OAO Rostelecom, a NYSE-listed Russian company that was the single-largest provider of fixed-line telephony services in the country. This merger also entailed the merging of a number RTOCs all coming under the Rostelecom umbrella. A large and difficult deal, work completed on it in April 2011.

Allen & Overy, in this area like others, has seen some turbulent times, with departed partners Konstantin Kroll and Varul Gupta. Having said this, it is perhaps fair to mention that corporate work was not the most important area for these practitioners so their departures are more likely to have an effect in capital markets than on the corporate side.

As ever, A&O tends to garner a lot of work from its superlative banking team. Some even suggest that the firm's deal flow has increased, and one peer says: "Allen & Overy could possibly move up to Tier Two, they have been very active."

Not everyone necessarily agrees with this though, as one partner comments: "A&O are not doing so well at the moment."

Putting the market to one side and focusing on the deals it is clear that A&O does merit its tier placing. The standout deal was arguably a team, led by Tim Shilling and James Roe, advising Rosneft Oil Company as it reached an agreement with Petróleos de Venezuela to acquire its 50% stake in Ruhr Oel for a figure of $1.6 billion.

Shilling also was busy advising AES Corporation as it established a joint venture with Koç Holdings, which is aimed towards developing power generation assets in Turkey, a deal worth $275 million.

Baker & McKenzie came off the back of a very good year last year, with partners remarking that its standings probably came on the back of those successes. The team has however continued to hold its own in the middle of the market, as one partner says: We do see Baker & McKenzie but they are more commercial, smaller deals."

Somewhat contradicting this view is the firm's deals, with one in particular very noteworthy. On this Alexander Monin, alongside Nadia Goreslavskaya, advised Commscope, an international company that deals in infrastructure for communication networks, on its merger agreement with The Carlyle Group. The group will now take Commscope private, and the deal was completed in early 2011 for $3.9 billion.

Another good deal once again featured Monin, as he acted for Agilent as it acquired Varian, the largest manufacturer of scientific instruments in the world. Taking into account post-completion integration work, the deal closed for $1.5 billion in March 2011.

After reporting a year flush with energy deals on the back of its merger, CMS Russia seems to have expanded its scope a little, working with a number of banks over the past 12 months. This includes names such as Sberbank, Russia's largest, and Aareal bank.

In fact, one of the mandates on which the firm was engaged by Sberbank was an energy deal, advising on its acquisition of a shareholding in solar power company Nitol Solar. The stake was purchased from Alfa Bank for a confidential sum, and completed in January 2011.

Away from the banks partner David Cranfield, who is based in Russia and has a good experience in coordinating the different offices working on international deals, advised the British construction firm Interior Services Group (ISG) on its full acquisition of Olson Enterprise from Eurasia Group, a Russian investment and industrial concern. The deal completed in June 2010 for an undisclosed sum.

Finally, the team, again helmed by Cranfield, advised Ilim Timber Industry on its €100 million acquisition of Klausner Nordic Timber and Klausner Holz Bayern, German sawmills, from Klausner Group, a German company active in the wood industry. It acquisitions were completed in August 2010.

Latham & Watkins has had its hands full with telecoms mandates in recent years and it continued into this period, with a large deal sealed by the team in this area.

Leading lawyer and head of department Chris Allen, as ever, was active on the transaction, representing Mobile Telesystems, a leading telecoms company listed on the NYSE, as it merged with London-listed Comstar, in the process creating the largest integrated telecoms provider in the Russia and CIS regions in the process. The mammoth deal, which also saw a parallel voluntary tender offer from MTS for a 9% stake in Comstar, closed for over $1.7 billion in the early part of 2011.

The highlight deal for the team however was definitely representing Wimm-Bill-Dann (WBD), a NYSE-listed juice/dairy company, and its selling shareholders as PepsiCo acquired a 66% stake of its share capital. The single largest foreign investment into Russia, setting aside oil and gas, the deal completed earlier this year for a figure approaching $3.8 billion.

Salans maintains a steady tier three presence again this year, keeping a turnover of smart, mid-market deals in a number of different sectors. As one partner says: "Salans have fingers everywhere! They work across the sectors."

The standout deal for the team, led by Todd Culyba out of Moscow, was advising Sistema, the largest public financial corporation in Russia, which possesses a very diverse portfolio. In this case the corporation was selling Sistema Telecommunications, Informatics and Communications to Mobile Telesystems for a combined total of $438 million. The deal also included key IP assets such as a series of trademarks. With the assistance of London partner Tatiana Kruse the deal closed in December 2010.

Alrud is one of the preeminent Russian firms, viewed as one of select few domestic outfits that can be mentioned in the same breath as international firms. "Alrud did some solid deals," states one partner.

This is not a unanimous opinion though, as some peers do feel that international clients require international firms, as one says: "I would never recommend a Russian firm to an international client. Simple as that."

The firm does however have an international capability, best demonstrated on a good deal it completed this year. This was advising, in cooperation with Wilson Sonsini Goodrich & Rosati, Skype, as it acquired Qik, a California-based mobile video software company that maintains an office in Moscow. The deal spanned a number of jurisdictions and completed fully in January 2011.

In addition to this, the firm joined up with a number of international firms, including Slaughter and May, to put together a joint venture aimed at investing in the tourism industry in Russia.

Egorov Puginsky Afanasiev & Partners is very much a firm on the up. It was built around its corporate capability and had a very exciting year.

"Egorov Puginsky is a pure Russian law firm and is very close to the government. They are well-known and are strong in M&A," explains one peer

"Egorov is very ambitious, and looking to hire international lawyers," says another, a comment made to look quite understated when you consider that recently the firm agreed to merge with Magisters, creating the largest firm in the Russia and CIS region. As it is, Egorov stands as very much a firm to keep an eye on in coming years.

In terms of work, the best among a clutch of multi-billion dollar deals was its activity on the Danone merger with Unimilk. This deal, which took in operations across Russia, Belarus, Azerbaijan, Kazakhstan and Ukraine, created the new market leader for dairy products in the CIS and closed for $2.4 billion in November 2010. The deal also went on the win the IFLR magazine's 'M&A Deal of the Year' award for 2011.

Norton Rose is traditionally very big on finance work but does have a fair reputation for corporate work, with the market approving of its tier placing.

The firm also made moves to buttress its team in the Russian capital, bringing in experienced counsel Nick Dingemans from Clifford Chance as a partner in June 2010. Having been active in Russia since 2005, Dingemans has a good knowledge of the oil and gas sectors as well as resources such as mining and metals.

The team in mid-2011 had quite a few mandates running, and hence under confidentiality, but one good deal saw it advising Strabag, the Austrian construction company, in its acquisition of a 26% stake in Transstroy, a large Russian road construction group. Strabag paid €70 million up front but was awaiting due diligence to complete before a final purchase price was agreed. Senior partner Valentina Gluhovskaya led on this deal, which was expected to complete some time later this year.

Goltsblat is a firm gaining increasing visibility in the corporate arena, as one partner comments: "Another up and coming firm is Goltsblat. They have potential, have a lot of people and are ambitious, which is good of course."

Anton Sitnikov heads up the corporate team and he was active, alongside partner Ian Ivory, on one of the firm's highlight deals. This was acting for Sberbank on its acquisition of a 25% (+1) share in Detskiy Mir, the largest children's goods' chain in Russia. The transaction closed in December 2010 for $110 million.

Nektorov Saleviev & Partners has seen immense growth in this area over the past 12 months, with half a dozen lawyers added to the team overseen by Alexander Nektorov.

The team's biggest deal is a mammoth ongoing concern for INTER RAO UES and INTER RAO Kapital, as they look to acquire substantial holdings in the energy sector. This includes targets such as RusHydro, OGK-1, _GK-2, OGC-3, OGK-4, Enel OGK-5, OGK-6, TGK-1, TGK-2, MOSENERGO, TGK-6, TGK-7, TGK-9, _GK-11, TGK-11 Holding, Irkutskenergo, Kuzbasenergo, Saratovenergo and Altaienergo, among others, all of which are engaged in the energy sector.

The intention is to create the largest vertically-integrated power company and the deal is estimated to be worth anything up to $9.5 billion when it finally completes.

Russin & Vecchi has found itself acting on a number of interesting mandates this year, with new senior associate Sergey Patrakeev, who was taken from in-house at MegaFon in November 2010, also involved. The firm tends to see a lot of its work channelled from the Far East, where it has associate offices, and its bigger deals this year bear this out.

For example, Patrakeev formed part of a team, augmented by Andrey Danilov and department head Sergei Lazarev, who acted on one of the team's big transactional deals. This deal entailed advising Samsung C&T Corporation on the purchase of a coal extraction company located in the eastern part of Russia for $10 million.

Another deal from that region saw the team carry out due diligence on a target, a confidential timber processing company in Russia, on behalf of Chinese firm Kai Tong. This deal closed earlier this year for a value of $40 million.

Vinson & Elkins was one of the very first firms to get in on the ground in Russia, with its Moscow office opening in 1991, while it has maintained an interest in the country since the 1970s.

The M&A team here draws on this pedigree and keeps itself very busy. One good deal was led on by department head Natalya Morozova, advising the target Tatex, through its owner Devon Energy Corporation, on the sale of a 50% stake to Tatneft, a transaction which completed in November 2010 for an undisclosed sum.

Morozova also took the lead on another highlight deal for the firm, advising Speedway Motorsports as it sold oil company Visheraneft, located near Perm, and another company called Vorga, situated close to Ukhta, to Oil Ventures Development Limited. This deal also closed for an undisclosed sum in June 2010.