Best of the Best: China Law & Practice Awards 2007

FIRM OF THE YEAR AWARDS

Capital Markets & Corporate Finance

Freshfields Bruckhaus Deringer

Freshfields Bruckhaus Deringer has continued to lead the field in capital markets and corporate finance, and has maintained its top position by advising on many of the most significant transactions of 2006-07. One such deal was advising CICC, CITIC Securities, Citigroup, HSBC and Lehman Brothers on the US$5.95 billion A- + H-share listing of China CITIC Bank, for which the retail portion of the global offering was more than 220 times oversubscribed.

Freshfields also advised Lehman Brothers, Goldman Sachs, UBS and other managers on the US$1.5 billion convertible bond issue by China Petroleum and Chemical Corporation (Sinopec). The law firm also advised sole bookrunner Credit Suisse on the US$225 million convertible bond issue by property group Hopson Development. The bonds were denominated in renminbi but settled in US dollars.

The firm also acted as Hong Kong and US counsel to China Communications Construction on its US$2.4 billion initial public offering (IPO) and listing on the Hong Kong Stock Exchange. In addition, it acted as Hong Kong counsel to the underwriters, led by Merrill Lynch, CICC, Credit Suisse, Deutsche Bank and ICEA, on the US$22.1 billion Hong Kong IPO and global offering of Industrial and Commercial Bank of China (ICBC), which won China Law & Practice's Capital Markets & Corporate Finance Deal of the Year.

Mergers & Acquisitions

Linklaters

Linklaters has a 10-year track record of advising on more 'firsts' in China than any other firm. From advising on the first acquisition of shares in a PRC-listed bank by a foreign bank to representing the first mainland bank to list outside of the PRC, Linklaters has established itself as a leader in the M&A field in China. It is now pushing forward with high-profile work in derivatives, Sinosure financings, and pre-IPO convertible bonds. The firm also has expertise in advising on complex transaction structures and on politically and commercially-sensitive business matters in China.

The firm's China practice includes some 110 Chinese-speaking lawyers spread across its Beijing, Shanghai and Hong Kong offices. The firm prides itself on its capability for dual-language documentation and real-time bilingual negotiation.

Linklaters' key M&A deals in 2006-07 include advising China Broadband Capital Partners on its private equity investment in a PRC media company and representing Morgan Stanley on the sale by Aeroports de Paris Management of France of its entire stake in Beijing Capital International Airport.

The firm also advised Copenhagen Airports on the acquisition of a 20% strategic interest in Hainan Haikou Meilan Airport's IPO and represented Dah Sing Bank and Carlyle on the US$128 million joint acquisition of a 24.99% stake in Chongqing Commercial Bank. In addition, the firm advised financial advisers CICC and Merrill Lynch on the HK$17.7 billion reorganization of the aviation industry (involving Air China, Cathay Pacific, CITIC Pacific, CNAC, Dragon Air and Swire Pacific), as well as on the related HK$3.23 billion privatization of CNAC by Air China.

Private Equity & Venture Capital

Fangda Partners

A rising star among PRC law firms, Fangda Partners has proved its strength over the past year by advising on large deals as well as dozens of smaller private equity financing transactions at different stages, representing both investors and issuers. The capacity of its private equity and venture capital team is reflected in the deal volume and the aggregate transaction value, giving the firm a leading market position.

Fangda's clients include The Carlyle Group, TPG, Blackstone and Goldman PIA. Significant deals in 2006-07 include advising Jiangshu Chengde on Carlyle's US$200 million acquisition of a 49% stake in the company and advising CCMP on its US$40 million investment in Wuhan Kaidi.

The firm also represented Yingli Green Town Energy on its US$200 million private placement for pre-IPO financing, advised Hisoft in its US$30 million Series-B financing, counselled Trina Solar on its US$40 million Series-A equity financing and advised Solarfun on its US$40 million Series-A equity financing .

Project Finance, Infrastructure & Energy

Allen & Overy

Considering its reputation and its track record, it comes as no surprise that international law firm Allen & Overy is the only firm to have won the Firm of the Year award in two categories. The firm's China offices are staffed with over 100 internationally-qualified lawyers, allowing for comprehensive multi-jurisdictional work and cross-border deals for Chinese clients, plus expert advice for international clients with businesses in China. Allen & Overy's China team advises on Hong Kong, UK and US law, and the firm also has a US-China team based in New York.

Key deals included the Deal of the Year-winning CNOOC and Shell Petrochemicals refinancing of the Nanhai Petrochemicals project and advising a multinational oil company on a proposed aromatics and refinery joint venture in eastern China.

The firm also advised EDF on the restructuring of the Shandong Zhonghua power project and represented China Development Bank on a number of key transactions, including the financing of CITIC's acquisition of oil assets located in Kazakhstan and owned by Canadian company Nations Energy.

The firm also advised Airtricity and Iberdrola on their strategic investment programme into PRC wind-farm projects, and advised the lenders on Shanghai Chemical Industry Park Industrial Gases Company's foreign-invested industrial gas project in Caojing, Shanghai.

Securitization & Structured Finance

Allen & Overy

Allen & Overy also won an award for Firm of the Year in the niche field of securitization and structured finance. The firm's derivatives and structured finance group in Hong Kong, Beijing and Shanghai has advised leading international banks and securities houses on capital markets issues involving embedded derivatives, including equity, credit, index and other asset-linked bond and note issues, warrants and convertibles.

The firm also serves as Hong Kong, European and US counsel to the International Swaps and Derivatives Association (ISDA) and advises on the increasingly-active PRC derivatives market, having assisted several foreign financial institutions on their derivative transactions with counterparties in these jurisdictions. Allen & Overy has been heavily involved in developing new derivatives and structured products within a challenging legal and regulatory framework.

In 2006-07, Allen & Overy advised on several collateralized debt obligation (CDO) transactions, including China Insurance Group Asset Management and China International Reinsurance's US$1 billion global investment-grade managed synthetic CDO issue, arranged by Deutsche Bank in London. The firm also advised several leading investment banks on managed CDO squared transactions, including rated multi-tranche issuances, as well as an entirely synthetic CDO squared transaction for a PRC investor.

The firm also advised on several convertible bonds (CBs) over the past year. It advised Deutsche Bank on the US$150 million zero-coupon CB issue by China Milk Products, represented ABN Amro on CB issues by VST Holdings and U-Right International Holdings and advised Aptus Holdings on its inaugural CB issue. In addition, it advised Merrill Lynch on a CB issue by Chinese People Gas and advised Sinochem Hong Kong Holdings on its first-ever CB issue.

DEAL OF THE YEAR AWARDS

Capital Markets & Corporate Finance

ICBC's Groundbreaking IPO

Industrial and Commercial Bank of China's (ICBC's) IPO in October 2006 won China Law & Practice's Deal of the Year in the area of capital markets & corporate finance. The IPO, which is the world's largest to date, was very popular with investors – it was more than 70 times oversubscribed in the Hong Kong retail tranche and 30 times oversubscribed in the global institutional placement. After the listing, ICBC's market capitalization increased by about US$26 billion to US$139 billion, overtaking Citigroup in July 2007 as the largest bank in the world.

ICBC's IPO broke several records: It had the largest transaction amount and volume on the first day of listing in Hong Kong; the largest buy-and-sell order for a single day and single transaction; the largest number of Hong Kong applicants; and the largest amount of capital frozen for share subscription.

The transaction was also the first successful simultaneous A- + H-share dual listing, whereby shares were sold on both the Shanghai and Hong Kong stock exchanges at the same time. The deal involved close coordination with regulators in Hong Kong, significant disclosure work and a tight timetable – the deal was completed in just seven months from the time the mandates were given out.

Davis Polk & Wardwell was US counsel to ICBC, and assigned 13 lawyers to the deal, four of whom were partners. According to the firm, the IPO represented the culmination of a year-and-a-half process that involved many complex legal issues, many of which related to the groundbreaking dual listing. The offering was also made challenging by the need to restructure a number of bad loans that had been acquired.

King & Wood advised ICBC as PRC counsel, while Herbert Smith advised the bank on Hong Kong law. Shearman & Sterling, Freshfields Bruckhaus Deringer and Haiwen & Partners advised the underwriters (Merrill Lynch, Credit Suisse, Deutsche Bank, China International Capital Corporation and ICEA Capital).

The listing was also notable in that it was the first to adopt the new 'White Form eIPO' application method, which allowed Hong Kong retail investors to apply online through a website for shares to be issued in their own name. Over 90,000 applications were received through this channel. Freshfields Bruckhaus Deringer led the coordination process with the Hong Kong regulators (the Securities and Futures Commission and Hong Kong Monetary Authority) in order to put the new application method in place.

Mergers & Acquisitions

Acquisition of Guangdong Development Bank

The acquisition of Guangdong Development Bank (GDB) was unique in that it was the first time an international financial services provider, leading a consortium of co-investors, was allowed to obtain substantial ownership and a significant management role in a Chinese financial institution. Citigroup and its consortium of investors acquired an 85% stake in GDB, a precedent likely to lead to similar transactions in China.

The complex transaction took place over a fairly short period of time and involved a large deal team representing all of the parties concerned. Those factors, coupled with the multiple time zones involved, made overall coordination of the transaction challenging.

Jones Day represented IBM, one of the two foreign investors in the GDB consortium, while Davis Polk & Wardwell served as US counsel to strategic investment manager Citigroup. Linklaters advised Citigroup on the auction process and on negotiations with GDB, as well as negotiations between Citi and its co-investors.

Consortium investors such as IBM were given the opportunity to invest in GDB only after 12 months of prior negotiations, and Jones Day notes that its lawyers had a lot of catching up to do towards the end. The deal was one of the largest acquisitions of a majority stake in a Chinese bank, and was also one of the largest takeover battles. The Citigroup-led consortium had competed for over 18 months with two other bidders.

Jun He Law Offices represented Ping An Insurance, originally the only potential buyer before it turned into an auction, in which it was one of the final bidders. The highly-competitive bidding process meant that lawyers had to deal with a high degree of sensitivity, and many spent over a year working on it. Says Kirk Ke Tong: “This transaction tested Chinese regulators' limits in allowing foreign investment in China's banking industry”

Other firms advising on the deal included Allens Arthur Robinson, Cravath Swaine & Moore, Linklaters, and Simpson Thacher & Bartlett advising on international law, and Commerce & Finance Law Offices, Fangda Partners, Haiwen & Partners, King & Wood, and Trust Law Firm advising on PRC law.

Private Equity & Venture Capital

Carlyle's investment in China Pacific Life Insurance

This deal was the largest private equity investment in China yet, with a value of US$800 million, and was also the largest instance of foreign investment in the Chinese insurance sector.

The deal involved the swap of Carlyle's previous investment in China Pacific Life Insurance, a subsidiary of the target company, into new shares issued by the target, as well as an additional cash investment to subscribe for new shares.

Fangda Partners, led by partner Jonathan Zhou, acted as Carlyle's PRC counsel, advising on due diligence, deal structuring, regulatory issues, negotiations and deal completion. AllBright Law Offices and King & Wood also advised on PRC law, while Linklaters advised on international law.

Project Finance, Infrastructure & Energy

Refinancing of the Nanhai Petrochemical Project

The refinancing of the Nanhai Petrochemicals project made the plant the largest foreign-invested petrochemical plant in the PRC to date. The refinancing deal, with financing provided by a consortium of Chinese banks, consisted of a US$1.3 billion term loan facility and Rmb12.4 billion of secured term and revolving credit facilities.

The financing was noteworthy for an innovative and cost effective trust loan, and the deal has set the standard for large infrastructure lending in China.

A joint venture between Shell Petrochemicals, China National Offshore Oil Corporation (CNOOC) and Guangdong provincial government, the Nanhai Petrochemicals plant is capable of producing more than two million tonnes of plastics and chemical intermediates each year.

Allen & Overy acted as international counsel to CNOOC and Shell in the original financing and refinancing of the Nanhai Project, while Jingtian & Gongcheng provided PRC counsel, preparing and negotiating the package to the banks for the financing bids and related finance documents.

According to Allen & Overy, the main challenge was the extremely tight timetable set by the sponsors: The original financing for Nanhai took almost three years, but these two law firms had to close the refinancing in less than four months. The strategy involved developing a set of financing terms that met the objectives of both the JV partners and the sponsors, which the mandated lead arrangers could accept virtually without amendment.

Securitization & Structured Finance

Dynasty Assets' CMBS issue

China's first-ever commercial mortgage-backed securities (CMBS) transaction involved the issuance by Dynasty Assets (Holdings), a Cayman Islands incorporated special purpose vehicle (SPV), of US$145 million series 2006-1 floating rate secured notes. The notes are the first of their kind to be backed by real estate assets located in the PRC, in this case nine shopping centres located in nine cities in the eastern provinces of China.

Challenges included taking domestic security over real property and matching onshore renminbi cashflows to an offshore US dollar-denominated investment product in order to achieve an international rating and listing.

Paul, Hastings, Janofski & Walker advised Citigroup and Macquarie Bank on the completion of the US$145 million transaction. The Hong Kong office of Walkers acted as Cayman Islands counsel to the issuer, working with the arrangers and lead counsel to assist with the structuring, development and execution of innovative debt finance structures. Says Hugh O'Loughlin of Walkers: “We hope to see more CMBS transactions backed by PRC assets using Cayman Islands issuers”

Other firms advising on the deal include Jun He Law Offices and Zhonglun W&D Law Firm advising on PRC law, Madun Gujadhur Chambers on Mauritian law, and Mallesons Stephen Jaques on international law.

Mallesons, which was counsel to Dynasty Property Investment, helped it acquire the properties and raise the equity and debt capital. Comments partner Steven Christopher, who worked on the deal with Hayden Flinn and their team: “The deal was particularly challenging from a regulatory standpoint. It required patience, flexibility and polite persistence. The success of the deal is a testament to the collective patience and determination of all the teams involved – sponsors, bankers and lawyers”

INTERNATIONAL FIRM OF THE YEAR AWARD

Freshfields Bruckhaus Deringer

Freshfields won the award for International Firm of the Year, based on its combined points rankings in all five categories. This vote of confidence from China Law & Practice's panel of in-house counsel reflects the strengths of this outstanding firm.

PRC FIRM OF THE YEAR AWARD

King & Wood

King & Wood's superb year has obviously impressed its contemporaries, and its rise to fame both within China and internationally has been well earned. The firm has acted as PRC adviser in three of five of China Law & Practice's deals of the year, and has played a leading role in even more.

THE PANEL

The China Law & Practice Awards 2007 would not have been possible without the assistance of an elite judging panel, which included some of the top minds in the legal field in China. These panelists were instrumental in selecting the winners in each of the categories, and they have brought years of real-world experience and professional insights to the selection process. Below are details on a few panelists.

Wesley Chiu

Wesley Chiu is the vice-president general counsel of SCA Asia Pacific, a global consumer goods and paper company. Its Asia-Pacific headquarters are based in Shanghai, with operations in 13 countries and more than 7,500 employees across the region. Prior to joining SCA, Wesley worked at various international firms, focusing on foreign direct investment and M&A.

Angelina Kwan

Angelina Kwan is the head of legal and compliance for Cantor Fitzgerald International/BGC Partners, and is responsible for all legal and regulatory matters for the Group in the Asia-Pacific region. Prior to joining the group, she was a director of the supervision of markets division as well as a director of enforcement at the Hong Kong Securities and Futures Commission. Kwan has worked for a number of international banks and brokerages, where she established internal audit, compliance and legal functions for them. She has over 20 years' experience in regulation, compliance and audits across a wide range of businesses in both Asia and the United States.

Andrew Lam

Andrew Lam is the group legal counsel in the M&A/corporate group legal department at Standard Chartered Bank. Prior to joining Standard Chartered, he worked at an international law firm in Hong Kong. Lam has a broad range of transactional experience on share and asset acquisitions and disposals, equity issues, IPOs, takeovers and general corporate matters. He has also prior experience of working at a listed company and an investment bank.

Angela Mak

Angela Mak is an executive director, head corporate general counsel and company secretary at TOM Group. Prior to joining the company, she was a senior group legal counsel of Hutchison Whampoa. She holds a Bachelor of Commerce degree and a Bachelor of Laws degree from the University of New South Wales in Australia and has been admitted as a solicitor in New South Wales (Australia), England and Wales and Hong Kong.

Yongyun (Wayne) Su

Yongyun (Wayne) Su works with Siemens China in Shanghai and takes care of extensive legal matters related to power generation and power transmission and distribution businesses. Su received his law degree at East China University of Politics and Law. After graduation, he started his career with Shanghai Yishi Law Firm and later worked at Johnson Stokes & Master's Shanghai office as a legal consultant. Since 2003, he has been an in-house counsel at various leading multinational companies in the computer, chemical and electronics industries.

Liu Wenzhao

Liu Wenzhao is General Manager of the legal department of Sinochem International Corporation, a listed company on Shanghai Stock Exchange. Liu received a Bachelor Degree of English Literature from Shanxi Normal University and a Bachelor Degree in IP Law and a Master Degree in Civil and Commercial Law from Renmin University of China.

Stevens Wu

Stevens Wu is the legal and commercial affairs manager at CommVerge Solutions, a leading telecom system integration provider in Asia-Pacific. He is based in Shanghai and is responsible for legal affairs, commercial negotiation and the supply chain of the company, and also offers advice on policy and strategic matters. He previously served as legal counsel at Alcatel, at which he was primarily responsible for contracts, intellectual property, export control, internal training, government lobbying and related matters in China.