ALB: What are some of the recent developments at Walkers?
Andy Randall: The world has changed dramatically due to the impact of COVID-19 and, whilst the effects of the pandemic have been challenging, it has shown the resilience of our people, our clients and our business to adapt and thrive. We recently announced the promotion of 32 attorneys across the Walkers’ network globally. In Asia, we welcomed the addition of two partners in Hong Kong, Stuart D’Addona in the Insolvency & Dispute Resolution practice and Shamar Ennis in the Finance practice. They are joined by three counsel, Audrey Coker (Finance – Hong Kong), Victoria Raymond (Insolvency & Dispute Resolution – Hong Kong) and Tania Toh (Investment Funds - Singapore) and five senior associates. In addition, we expanded our Walkers Professional Services (WPS) senior leadership team with the addition of Daniel Booth as Senior Vice President to lead WPS in Asia Pacific. Daniel brings significant commercial and strategic leadership to the firm, with over 25 years’ experience based in the Asia-Pacific region.
An important and exciting milestone this year has been the addition of significant Bermuda legal capability in Asia. We offer a broad range of Bermuda corporate, finance, restructuring, insolvency and dispute resolution legal services from our Hong Kong and Singapore offices, providing comparable bench depth, technical expertise, commercial acumen and language skills to our market-leading Cayman and BVI offering in the region. This is a natural progression following the exciting and sustained growth of our on-island Bermuda business over the past five years, with our Bermuda team in Asia an integral and fully-integrated part of our global Bermuda business.
ALB: Why Did Walkers decide to enter the Bermuda legal market and offer Bermuda legal and corporate services in Asia?
Randall: Walkers first launched our Bermuda offering five years ago through our association with Taylors. We saw a gap in the market for an alternative to the incumbent law firms, with Bermuda clients benefiting from our Tier-1 international legal and fiduciary services offering. Since then, our Bermuda office has done tremendously well, growing rapidly to become the third-largest international law firm in Bermuda. We are grateful to the many clients that encouraged our initial investment into the Bermuda market and we thank them for their on-going support.
The expansion of our Bermuda law offering to our Asian offices, as part of our global Bermuda drive, was and remains very much client-driven. We consider Walkers to be the pre-eminent offshore firm in the region and Bermuda is a much-used offshore jurisdiction in this part of the world. It follows, therefore, that our clients wanted us to have deep on-the-ground Bermuda capability alongside our Cayman and BVI offering. As soon as the regulatory position permitted, we extended our Bermuda capability to the Asian region. We have built a team with significant depth, with local leadership from Hong Kong and Singapore-based partners highly experienced in Bermuda matters, operating as a fully integrated part of the global Walkers Bermuda team.
Asia has a rich history of using Bermuda companies, with nearly a quarter of Hong Kong-listed companies being Bermuda incorporated (second only to Cayman). These companies are very active and often form part of a group involving other jurisdictions in which we practice. Clients were naturally keen to ensure access to the Walkers quality and service levels for all major offshore jurisdictions involved in regional cross-border transactions, including Bermuda, on a ‘one-stop-shop’ basis rather than referring the Bermuda piece elsewhere.
Since launching our Bermuda office, we have also often been in a position to provide conflict-free contentious advice out of Bermuda with the support of our Insolvency & Dispute Resolution teams in Asia, and we are now able to further build on that groundwork providing Asia time zone-friendly advice in Chinese and other regional languages.
ALB: How big is the Bermuda team in Asia?
Rupen Shah: We work very closely with our Bermuda office, operating as one global Bermuda team. We feel this provides us with a competitive advantage: clients have the benefit of Bermuda, Cayman and BVI advice in their time zone, with relevant language skills, and with real-time access to a deeply experienced and skilled team. We have five partners who are leading our Bermuda offering out of Asia, each with significant Bermuda legal experience in their respective practice area. They are supported by a deep bench of lawyers across Hong Kong and Singapore, each a Registered Associate in Bermuda. Put simply, Walkers intends to be recognised in short order as a ‘centre of excellence’ for the provision of Bermuda law advice in the region, delivered in exactly the same efficient and commercial manner - and with equivalent experience and talent - as for Cayman and BVI law.
ALB: Will your Bermuda offering potentially adversely impact your Cayman and BVI business?
Shah: No, not at all. Our Bermuda practice very much complements our existing BVI and Cayman business. Andy discussed how Bermuda companies in Asia often form part of larger corporate groups that encompass other jurisdictions in which we practice and so it was crucial for us, as the leading offshore law firm in the region, to be able to service Bermuda work as soon as the regulatory position permitted. In addition, Bermuda as a jurisdiction opens up exciting new avenues of work in the region, including in the (re)insurance and digital assets spaces.
ALB: Is Bermuda still attractive for Asia-based clients?
Shah: Bermuda is a major international financial centre. It remains the dominant jurisdiction of choice for insurance, reinsurance, FinTech and digital assets. The digital assets economy remains in its infancy at present and is expected to see huge growth in the coming years. With Bermuda’s world-class expertise in both these fields, we fully expect clients in Asia to utilise Bermuda as their jurisdiction of choice.
Walkers has helped to foster the growth and popularity of Cayman Islands and BVI structures in the region and we intend to bring this same vigour to support and promote Bermuda in the region as well.
ALB: What are the biggest Bermuda opportunities you see in the region?
Davies: Bermuda was the first overseas jurisdiction to be approved by the Hong Kong Stock Exchange (“HKEx”). As at the end of 2019, there were 471 Bermuda companies listed on the Mainboard of the HKEx and 48 Bermuda companies listed on the SGX.
The volume and significance of Bermuda-listed companies in the region present significant opportunities for Walkers given the depth of our equity capital markets and public M&A expertise.
As Rupen has mentioned, insurance, reinsurance (including insurance-linked securities), FinTech and digital assets, as well as the funds products that service these areas, are key areas of opportunity for the development of the Bermuda legal product in the region.
The provision of corporate services goes hand-in-glove with the legal work, both in these areas and across our transactional disciplines more generally - including the establishment and maintenance of listing vehicles, holding companies and transaction SPVs - and so we see significant opportunities for WPS in the region. Our teams very effectively marry the provision of best-in-class legal advice with the corporate services piece and we believe that our combined service offering sets us apart from our competitors in the region.
ALB: What trends are you seeing in the market and what is your outlook for next year?
Jo Lit: We have had a very busy 2020 in the context of global events and we expect that to continue strongly in 2021. We’re seeing a distinct upward trend in the number of take-private transactions on which we’re advising, including de-listings from US and regional exchanges involving both Bermuda and Cayman. The reasons for this trend include geopolitical and US regulatory push factors, attractive valuations, record levels of PE dry power, and the increasing flexibility in potential re-listings back home. Interestingly, though, we are still seeing a strong pipeline of clients looking to list in the US, and, of course, plenty of equity capital markets work involving HKEx and other regional exchanges, so it is by no means one-way.
We have also seen a healthy volume of M&A activity involving offshore entities in the region in 2020. Looking at Bermuda, a good example is the US$3.59 billion acquisition of Luz Del Sur in Peru from Sempra Energy by China Yangtze Power in 2020, as well as the US$1.13 billion acquisition of interests in Tenke Fungurume Mining Complex by China Molybdenum Co., Ltd. last year. Walkers acted as Bermuda counsel to the buyers in both of these landmark transactions. We fully expect this trend to continue.
Joanne Collett: On the contentious side, we have seen a lot of creditors seeking advice as to enforcement options and defaults in repayment, but not necessarily enforcement action at this stage. There have also been a lot of exchange offers for bonds, refinancing and formal or informal standstill arrangements. There are also a lot of companies at the early stages of a restructuring process, which may, or may not, be able to secure the necessary support of stakeholders for their plan, and the liquidity to implement the same. Going forward, we expect there to be an increase in the number of enforcement actions, and potentially liquidation filings, coupled with restructurings of otherwise sound businesses, where quality businesses will be able to be rescued but less viable businesses may be wound up.
We are seeing a number of Bermuda companies listed on the HKEx in financial distress and seeking to take advantage of the “light touch” restructuring regime in Bermuda. This is a process whereby a company which is insolvent, or in the zone of insolvency, can seek the appointment of provisional liquidators for restructuring purposes with power shared between the incumbent board of directors and the provisional liquidators, who are professional insolvency practitioners. The idea is that a restructuring plan can be formulated and implemented under the supervision of the Court and with the assistance of the professionals, but at the same time management continue to be involved in the process. An additional benefit is an unsecured creditor moratorium, which can be recognised outside of Bermuda as appropriate. While this moratorium does not extend to secured creditors, this process is being used more and more; a result, to some extent, of where we are in the economic cycle. We expect this trend to continue.
Global political tension and economic stress will continue to create instability in the market, but as Albert Einstein said: “in the midst of every crisis, lies great opportunity”.