Judging the best law firm is deeply challenging. Many firms operate excellently in a local market. Others cross into multiple jurisdictions. Some achieve landmarks in many deals. Others have a landmark that outshines the great achievements of an accomplished field.
Deal flow in 2015 and 2016 has been affected by the weak hydrocarbon markets and global uncertainty. Sukuk, syndications and investments that should have happened were deferred. Cross-border investment increased as some investors sought stability in western markets. And, new markets opened in Africa, North America and Asia. New products were tested in the US (first regulatory Sukuk), the GCC (FX standardized documents and structured share trading) and Australia (bank-delivered real estate finance). New markets were opened in Africa (Ivory Coast) and ASEAN (Myanmar). Iran too re-opened to cross-border investment. Our legal nominees were put to the test managing collateral, taxation and innovation.
Despite tight liquidity, mega deals were achieved in Malaysia and the GCC. The capital market expanded in Oman. Perhaps each firm feels that the last year has been tough on transaction volume. Nonetheless, the year allowed each firm to address with success complex and challenging client needs. Even if Malaysia, the UAE and Saudi Arabia remain the pillars of the market, the new horizons in Africa, Australia and North America were touched upon with models for future growth.
Pakistani projects also helped Chinese financiers to come into contact with Islamic finance. Perhaps, the ‘One Belt, One Road’ projects will take the Chinese from inter-creditor status to co-Islamic-financier status. Many of the contenders are globally positioned to support Islamic finance with a sweet and sour flavor.
Asset Management & Funds: Simmons & Simmons Middle East
Walkers is always a leader in the asset management field. They coordinated the Airbus–IDB ALIF Fund for the leasing of new and second generation Airbuses in the OIC member states. King & Spalding continued their leadership with innovative work in Saudi Arabia, including for the Jeddah Economic Company and the formation of an associated fund company for the construction of what will be the world’s tallest building.
Simmons & Simmons, however, achieved astonishing results on a global scale. On the one hand, the firm takes pride in advising SEDCO Capital on the launch and ongoing investments of its Pan-European real estate fund. This Shariah compliant fund employed a unique Jersey ICC structure. Simmons & Simmons complemented the structure with a Shariah compliant financing structure that allows asset acquisition across Europe. The SEDCO project addressed more than fund formation. It covered tax, regulatory, banking, real estate and Shariah structuring.
On the other hand, Simmons & Simmons advised the governments of Indonesia and Kenya on areas relating to Islamic finance including funds. The firm also advised Sturgeon Capital on the restructuring of the Sturgeon Central Asia Fund to facilitate investment into Iran. As one of the longest standing international law firms in the Middle East, the firm has over decades built strong on-ground capabilities in various global markets across different areas including fund formation, tax, banking, real estate and Shariah structuring, making it the most accomplished Asset Management & Fund legal firm of 2016.
Banking: Herbert Smith Freehills
Arguably, banking is one of the two most heated categories. Malaysia firms Zul Rafique and Zaid Ibrahim & Co showed a diverse series of domestic transactions. Norton Rose Fulbright led the International Finance Corp into Iraq’s Kurdistan for a novel transaction expanding local power. Allen & Overy and Dentons showed wide reach. Each had strong merits to consider.
Farther afield, Herbert Smith Freehills assisted with a property acquisition financing for PropertyLink (Holdings) in Ormeau, Australia. PropertyLink entered into a Murabahah financing agreement for a facility amount equivalent to AU$13 million (US$9.8 million). The deal drew on the firm’s offices in Asia, Australia and the Middle East. This was National Australia Bank’s first domestic Islamic property financing. The deal addressed Australian financing and tax requirements.
Historically, Islamic finance in Australia has been constrained by Australia’s tax, regulatory and legal framework which gives rise to ‘round peg, square hole’ difficulties; however, Herbert Smith Freehills has successfully leveraged its global outreach and strong local insights to craft unique solutions to overcome inevitable ‘first mover’ hesitations and cautions, evident by its many pioneering Islamic finance instruments, including this groundbreaking Australian deal.
The solution involved an innovative back-to-back structured financing arrangement utilizing the Shariah principle of Wakalah tailored to fit the Australian market. A tailored security package was also crafted to support the structure. The transaction is expected to help open the Australian market for global Shariah compliant investors.
Capital Markets: Trowers & Hamlins
As expected, Capital Markets is one of the two most highly competitive categories. Clifford Chance showcased DP World’s throughput-based Sukuk. Allen & Overy showed a global presence which included both firms working Oman’s first private sector dual currency Sukuk. Adnan Sundra & Low advised on the largest capital markets deal in Malaysia in 2015 – the Jimah East Project. Linklaters demonstrated their worldwide capacity which included the first US bank regulatory Sukuk for a community bank offering Islamic finance in Michigan. Latham & Watkins was also active across multiple GCC capital market deals.
Trowers & Hamlins has been active in the GCC over the last 12 months, acting on numerous Sukuk deals of various sizes, domiciles and structures including advising Standard Chartered Bank (SCB) and National Bank of Oman (NBO) on the first high yield Sukuk in Oman for the Omani conglomerate, MB Holding (US$75 million). Trowers & Hamlins is also acting on a diminishing Musharakah-based development finance Sukuk program for a multiphase development in the GCC.
Trowers & Hamlins acted for the NBO as the issue manager, with SCB acting as the joint placement agent and joint lead manager on a dual currency Sukuk issuance by Mohammed al Barwani Holding Company (as the obligor). The US$76 million Sukuk were issued through an Oman incorporated SPV on the 29th June 2016. The deal represents the first dual tranche (Omani rial and US dollar) Sukuk issuance in Oman. The distribution was by private placement and listed on the new Bonds and Sukuk Market of the Muscat Securities Market. This is the first Sukuk under the new Sukuk regulations.
Zaid Ibrahim & Co also advised on this transaction.
Time and time again, Trowers & Hamlins has proved itself a stalwart Islamic finance law firm at an international level with expertise that spans across the UK, Middle East and is fast becoming the firm synonymous with Islamic finance in the ASEAN region, thanks to its position as the first foreign law firm to secure a Qualified Foreign Law Firm license in Malaysia.
Energy & Natural Resources: Clifford Chance
Adnan Sundra & Law worked on a number of key Malaysian deals including Jimah East Power. Pinsent Mansons and Linklaters worked on the Thar project in Pakistan which had unique complexity involving Chinese banks. White & Case was active in Saudi Arabian and UAE energy projects.
However, the award goes to Islamic finance giant Clifford Chance which worked on a slew of notable energy and natural resources transactions in the GCC over the past 12 months. From Saudi Electricity Company’s SAR2.5 billion (US$665.59 million) Murabahah facility to the US$4.7 billion financing to Yanbu Aramco Sinopec Refining Company, the firm’s most notable deal is Kuwait National Petroleum Company (KNPC)’s multi-billion Clean Fuels Project. This was the first time that KNPC has sought to access debt markets. Financing of the first phase of the project for KWD1.2 billion (US$3.97 billion) closed with local banks in April 2016 where the mandated lead arrangers included the National Bank of Kuwait and Kuwait Finance House on the conventional and Islamic finance tranches respectively. Future phases are expected to be open to international banks and export credit agencies. Al Tamimi also worked on the project.
Clifford Chance is indeed a dominating force in the Islamic finance industry; a force to be reckoned with, the magic circle firm is a strong global name with award-winning Islamic finance practices in all key Shariah finance centers from Europe, to the Middle East, Asia and even the Americas.
Insolvency & Restructuring: Allen & Overy
Much of the insolvency and restructuring work in the GCC happens in the shadows and goes unreported. Clifford Chance advised on the Limitless restructuring in the UAE. Linklaters worked on the Advanced Energy Systems restructuring involving Egyptian and international banks, including the European Bank for Reconstruction and Development, in a dual conventional and Islamic finance restructuring.
But it is heavyweight Allen & Overy which grabbed the title this year. The breadth, sophistication and volume of its work in the Islamic finance space across the Middle East, Europe and Asia never fail to impress, putting it one step ahead of its rivals. The firm (and Khoshaim & Associates in cooperation with Allen & Overy) advised the commercial participants in relation to the SAR798 million (US$212.46 million) restructuring for Saudi Cable Company. The restructuring involved Al Rajhi Bank, The National Commercial Bank, Bank Al Jazira and BNP Paribas, with the support of the Saudi Industrial Development Fund. The restructuring required a variety of different facilities which are regulated and coordinated through a restructuring framework agreement and an enhanced security package.
The restructuring provides Saudi Cable Company with an amortization of its debts amounting to SAR798 million over a period of seven years, with final payment due by December 2022. Baker & McKenzie acted for the creditors.
This key achievement was only one of Allen & Overy’s many activities in managing restructuring and insolvency in the Islamic finance market, for better or for worse, making them the busiest firm in this area.
Mergers & Acquisitions: Latham & Watkins
Latham & Watkins and Linklaters were neck and neck with EQUATE’s acquisition of MEGlobal International FZE, a developer, manufacturer, supplier and marketer of ethylene glycol. The firms advised on the bridge term loans and a Murabahah facility. The addition of MEGlobal positions EQUATE as an industry-leading petrochemical enterprise with an enhanced leadership position in the ethylene glycol (EG) sector. Currently, EQUATE contributes close to 60% of the revenue of Kuwait’s non-oil exports. The acquisition of MEGlobal will also provide EQUATE with enhanced geographic reach, including in the US Gulf Coast. Stikeman Elliot, ASAR–Al Ruwayeh & Partners and Hoskin & Harcourt worked on the EQUATE transaction as well.
However, Latham & Watkins gained an edge over Linklaters with its vibrant mergers and acquisitions (M&A) portfolio over the past 12 months. In addition to EQUATE, the firm advised on a number of significant cross-border M&A deals in the UAE and Africa including Egon Oldendorff (one of the world’s largest bulk shippers) on the sale of Emirates Ship Investment Company to Tristar Energy; Standard Chartered Bank on a substantial equity investment in souq.com; and the selling shareholders on the sale of Finance Bank Zambia to Atlas Mara. This award-winning firm continues to take the Islamic finance world by storm with its international experience and on-the-ground understanding of both the law and business practices.
Very deservedly, Morgan Lewis Bokius warrants a mention in this category as it represented TVM Capital Healthcare Partners in connection with the first exit by its TVM Healthcare MENA I Fund – the sale of ProVita International Medical Center to NMC Health.
Honorable Mention: Linklaters and Morgan, Lewis & Bockius.
Offshore Finance: Maples & Calder
The Islamic investment and Sukuk markets require substantial offshore structuring. This facilitates cross-border funding, allows international institutional investors to engage, and helps to overcome weak capital market or bankruptcy laws. Zul Rafique & Partners integrated an offshore treasury management component into the syndicated multicurrency Murabahah term facility for SapuraKencana Petroleum. This secured certain tax and exchange control requirement exemptions into the transaction. Latham & Watkins, on the other hand, delivered a complex structure of a GCC private office that relied on offshore and onshore vehicles working together.
However, in yet another stellar year for offshore finance, the award goes to historically, one of the strongest legal advisors in offshore transactions — Maples & Calder, which advises on the laws of the Cayman Islands, Ireland and the British Virgin Islands. Showing their Cayman Islands heritage, Maples & Calder advised on numerous Sukuk that required offshore facilities as well as funds benefiting from the Cayman’s numerous tax treaties.
One of the most notable deals the international firm has worked on in 2016 is the International Finance Facility for Immunisation Sukuk issued by the World Bank to raise funding for a global immunization program which has generated publicity and credibility for Islamic investment products in the global financial markets. The Sukuk are listed and rated. Maples and Calder acted as Cayman Islands legal counsel to the issuer and MaplesFS provided the directors and corporate services for the issuer. Other transactions Maples & Calder advised on include the Sukuk deals by International Finance Corporation, Kuveyt Turk, Barwa Bank, Emirates Islamic, Ezdan Holding Group, Al Hilal Bank and Noor Bank.
The consistently strong performance and high standards delivered by Maples and Calder make the firm an ideal, if not inevitable, winner of Best Islamic Firm for Offshore Finance. Its global reach, firm grasp of fundamentals and willingness to embrace new complexities make it once again the winner in a field that, while competitive, remains firmly dominated by an undisputed leader.
Private Equity: Morgan Lewis Bokius
Much of the GCC and ASEAN private equity business flies under the media radar. As a result, we enjoyed only a few nominations including Clifford Chance’s work for Al Tala’a International Transport Company financing for the acquisition of Hanco.
Yet Morgan Lewis Bokius stood out with its work with TVM Capital Healthcare Partners whereby it represented the latter in connection with the first exit by its TVM Healthcare MENA I Fund. This was the sale of ProVita International Medical Center to NMC Health. NMC Health entered into an agreement to acquire 100% of the issued share capital of ProVita, the leading provider of long-term medical care in the UAE, for an equity consideration of US$160.6 million paid in cash, from TVM Capital Healthcare Partners, the Olayan Group, Al Zarooni Emirates Investment and other minority shareholders.
TVM Healthcare MENA I Fund invested in ProVita in 2010 after identifying an unmet need for specialist long-term care in the UAE. ProVita has allowed many patients to stay in the UAE for the specialist treatment they require — previously many were required to travel overseas to receive the care they require. In 2012, ProVita became the first long-term care provider outside the US to achieve endorsement from Joint Commission International, a non-profit international healthcare accreditation organization. TVM’s development of ProVita and through to its sale reflects the growing importance of the UAE healthcare sector and supports the government’s initiative to make the UAE a destination for health tourism. NMC Health operates 21 facilities across the UAE and one in Spain, four of which are JCI-accredited specialty hospitals.
While Morgan Lewis has impressive expertise in a wide range of areas, this is the first year that the firm has taken home the award for Best Islamic Law Firm for Private Equity in a win that is both well-deserved and unequivocal. The firm has quietly supported the Islamic finance industry over the long-term through the nurturing and acquisition of exceptional talent and by its astute choice of deals and transactions. With its latest win, Morgan Lewis Bockius proves its position on the leadership board and cements its status as one of the most influential firms in the industry.
Other firms: Clyde & Co (counsel to the NMC); Al Tamimi & Co (local UAE counsel to TVM Capital); Tsirides & Co (Cyprus counsel to TVM Capital); Baker & McKenzie (counsel to Olayan Group (a significant shareholder)).
Honorable Mention: Clifford Chance.
Project Finance: Pinsent Masons
Zaid Ibrahim & Co and Zul Rafique & Partners deserve to be mentioned for their work on the Jimah East Power project as well as numerous financings for Malaysian project financings, which demonstrated their ability to deliver on complex transactions; however, the title of Best Law Firm for Project Finance goes to Pinsent Mansons for their exceptional work in a wide variety of projects in different markets.
In addition to advising on energy and healthcare projects in the MENA region, Pinsent Mansons has also been active in Asia – particularly Pakistan. One of its most significant deals is the US$700 million financing of Thar Block II 3.8Mt, a coal mining project; and the US$821 million financing of the 2x330MW coal-fired power project in Tharparkar, Pakistan. Pinsent Masons relied on a cross-border team working from Beijing, Hong Kong, Singapore and Dubai.
On this matter, Pinsent Masons acted for the two project companies: (1) the mining company which was a joint venture between the government of Sindh, Engro Corporation, a number of Pakistani investors and China Machinery Engineering Corporation (CMEC) and (2) the power company which was a joint venture of Engro Corporation, CMEC and a Pakistani financial investor.
Each financing comprised a mix of Chinese credit under Sinosure cover and conventional and Islamic Pakistan rupee tranches. Conventional financing was provided by a syndicate of Chinese banks consisting of China Development Bank, Construction Bank of China and Industrial and Commercial Bank of China.
The use of Islamic tranches to finance these projects demonstrate the immense importance of Islamic liquidity in current market conditions. Islamic financing was provided under the Musharakah structure by a syndicate of Pakistani banks (Habib Bank, Meezan Bank and Faysal Bank) and sat neatly with the conventional tranches under the head of a common terms agreement.
The Thar projects represented a greater than usual set of ‘firsts’. It was the first power project in Pakistan to utilize indigenous coal reserves and as such, marks a new era of energy security and economic development in Pakistan, a country which is facing a massive energy crisis. It was also the first project financing of a mine project in Pakistan.
Project finance is one of the most competitive categories in the annual IFN Law Awards and this year was no exception. With its latest win Pinsent Masons demonstrates not only its strength and superiority in the field but cements its position as one of the leading Islamic finance law firms globally — outpacing its rivals with a combination of expertise, dedication, transaction breadth and shrewd practice.
Real Estate: King & Spalding
The real estate segment never fails to see a flurry of activities. In the last 12 months, we have seen Baker McKenzie providing real estate advice across three continents, Clyde & Co representing inbound investor financing in the UK and the UAE and Zaid Ibrahim & Co keeping remarkably active in the Malaysian market despite the general slowdown in the ASEAN region.
But King & Spalding takes home the crown. The firm advised Jeddah Economic Company (a subsidiary of Kingdom Holdings) and Alinma Investment Company in relation to the establishment of a SAR8.6 billion (US$2.29 billion) Saudi Arabian Shariah compliant real estate development fund. This is also the largest fund of which we are aware has closed in the Middle East in the past year. The fund is regulated by the Saudi Arabian Capital Market Authority.
The fund obtained Shariah compliant debt financing and acquired a large plot of land to develop a kilometer-high tower, which will be the tallest structure in the world upon completion. King & Spalding represented Alinma Investment Company in the joint venture with Jeddah Economic Company. King & Spalding then represented the joint venture fund to acquire the land and to enter into the development and financing arrangements. This is likely the largest real estate transaction of 2016.
Latham & Watkins advised Alinma Bank on the SAR3.6 billion (US$958.45 million) Shariah compliant financing from Alinma Bank. The structure of the Shariah compliant financing involves a Musharakah, Bai Ajil and Ijarah. For this scale project, the financing is innovative. The financing is the largest real estate financing of the year in Saudi Arabia. The finance documents were signed in December of 2015.
King & Spalding has long been one of the most dominant firms in the Islamic finance legal space and is known throughout the industry for its strength and expertise. In recent years the firm has focused on building up its practice breadth, supporting and promoting talent and expanding into new areas. In turbulent financial conditions the firm has provided both stability and security to its clients, as well as achieving admirable growth. The latest win rewards both its current size and strength as well as future ambitions, and highlights the centrality of the firm to the wider industry both in the Middle East and globally.
Structured Finance: Latham & Watkins
We would like to highlight the following for their commendable work in structured finance: Dentons which advised Mashreq Bank on a dual conventional and Islamic financing for Royal Jordanian Airlines; Allen & Overy which supported the International Islamic Financial Market on the development of a standardized Shariah product; and Ashurst which worked on complex deals in the Australian real estate market.
The most impressive of the lot is Latham & Watkins which advised and continues to advise a Middle East-based privately-held holding/family investment vehicle in relation to a number of Shariah compliant margin financings and repo-like transactions with several banks including Deutsche Bank, Goldman Sachs and Societe Generale. The credits use an SPV structure. The SPVs are beneficially owned by high-net-worth individuals referencing shares in, or Sukuk issued by, a property development company listed on the Tadawul (the Saudi stock exchange). Transactions reached eight figures.
The deal structures are complex cross-border deals. They must comply with Tadawul’s listing rules with respect to ownership/transfer of shares and relevant disclosure requirements and Saudi Arabian rules relating to the security transfer of shares or Sukuk to the relevant SPV.
In addition, general Saudi law/regulatory issues with respect to margin debt/repos added to the complexity of these matters. These transactions are referred to as a ‘double lock’ in the market because of the double security structure (over the listed shares and shares in the SPV).
Trade Finance: Zul Rafique & Partners
Trade finance has often been the mundane space. Too often, banks and their legal counsels seek to perfect performance. This year, one Malaysian firm stands out in this space — Zul Rafique, whose work include a syndicated Islamic documentary credit-I facility and term-financing facility to construct what would be the largest sugar refinery in Malaysia.
Other significant work in this area is the Shariah compliant banking facility to Konsortium Jaya. Acting for Ambank Islamic, Zul Rafique assisted in the documentation of Islamic banking facilities of up to RM55 million (US$13.94 million) granted to Konsortium Jaya. The facilities met the trade and working capital requirements for the service and implementation of a RM91.9 million (US$22.38 million) contract awarded by Jabatan Akauntan Negara to design, develop, install, supply, deliver, test and maintain the software and hardware of the accounting system for the state government and the Multi Trade Finance Facilities-i of RM50 million (US$12.18 million) for the issuance of irrevocable LC-i covering the import or local purchase of raw materials and/or goods under the contract. The structure accommodated a financing for a period of up 150 days drawn under the bank’s LC-i.
Zul Rafique & Partners are the perfect example of a local firm that has expanded its capabilities to a global standard, performing intricate and complex transactions at an exceptionally high quality and ideally demonstrating the strength and capabilities of the Malaysian market. Its sterling work has not only assisted its local and regional markets to develop, but have supported cross-border trade and development to the benefit of the entire industry.
Honorable Mention: Al Tamimi & Co. (Kuwait) which assisted a Kuwait-based client to develop a facility to unlock cash from trade receivables.
And, the big winner is….
Twenty-eight firms submitted entries across 13 categories, with several showing exceptionally strong performance across multiple categories like Linklaters and King & Spalding, some demonstrating true international breadth like Allen & Overy, Clifford Chance and Simmons & Simmons and a few with impressive achievements in the local market such as Zul Rafique. But above the stellar line-up of truly commendable law firms we have this year, one firm managed to stand out with its exceptional involvement and leading role in the Islamic finance legal space in the past 12 months – we are proud to announce Latham & Watkins as the Best Overall Law Firm of 2016!
With victory in the Structured Finance and Mergers & Acquisitions categories, Latham & Watkins delivered on multiple fronts in different jurisdictions. The firm tackled some of the most complex problems for clients with creativity. The only firm to win two categories, Latham & Watkins achieved notice in the private and public space that pipped its highly qualified competitors.
One of the most coveted accolades in the Islamic finance industry, the IFN Law Awards continue to grow in sophistication and prestige year by year — weighing the scales this year has been challenging as submissions become even more competitive — a reflection of the fast-growing Islamic finance industry. IFN extends its heartiest congratulations to all winners and thank you for being a leading light of the industry, tirelessly pushing to bring the industry to the next level.