Is Africa the next China? The combined GDP of the continent’s 54 nations would make it the fifth-largest economy in the world, after the United States, China, Japan, and India. The continent includes seven of the world’s 10 fastest-growing economies, and average growth outpaces that of the United States and Europe.
Still, just three Am Law 200 firms—four, counting the now-defunct Dewey & LeBoeuf—have established a presence in sub-Saharan Africa: White & Case, DLA Piper, and Baker & McKenzie. “All law firms want to be first at being second,” explains Richard Tromans, a senior researcher at the U.K.–based law firm consultancy Jomati. “If you’re second, you’re going to be safe. That’s the psychology.” But most global-focused U.S. firms are already handling matters in Africa, and many are considering steps to increase their involvement, Tromans notes in Jomati’s report on Africa, published in May.
Conversations with more than a dozen Am Law 100 firms about their work in sub-Saharan Africa corroborated Tromans’s findings. “It’s fair to say we’re looking at our whole strategy,” says H. Philip Stopford, White & Case’s Western Europe, Middle East, and Africa project finance head. “We know the value of our Africa business, and it is huge.” Likewise, Alexander Msimang, Vinson & Elkins’s London office head, says that the firm’s work across Africa “has been going through the roof.” All but one of the 40-odd lawyers in his office have handled at least one Africa-sided transaction, he says.
The diversity of African work performed by U.S. firms is striking; the type of matters varies with each firm’s dominant clientele, practice strengths, and historical ties to the region. Those most visible are firms with the busiest London or Paris offices, and firms with the deepest roots in the infrastructure and oil and gas sectors.
Cleary Gottlieb Steen & Hamilton, for example, has historically been involved in international projects, privatizations, and sovereign debt matters in Africa. Last year Cleary advised China’s Sichuan Hongda Group on a $3 billion coal mine and power plant joint venture in Tanzania, among the biggest inbound investments in East Africa to date. More recently, Cleary’s African private equity work has taken off. Among others, it helped Helios Investment Partners LLP form a $900 million pan-African investment fund, the largest such fund ever raised.
Other U.S. firms have also benefited from rising private equity investment in Africa. Debevoise & Plimpton advised Helios on its acquisition of Nigeria’s largest e-payment service provider in 2011. This June, Kirkland & Ellis was tapped by Edcon Proprietary Limited, a South African retailer held by Kirkland’s longtime client Bain Capital, LLC, in selling its credit card portfolio to South Africa’s Absa Bank Limited for $1.2 billion.
Led by London-based Stuart Matty, White & Case had a hand in four of the largest sub-Saharan African financings last year, including three half-billion-dollar sovereign debt deals—for Nigeria, Senegal, and Namibia—and a $500 million corporate debt issuance for Nigeria’s Guaranty Trust Bank plc. To get tapped for transactions where often no templates exist, “you have to know what you’re doing,” says Matty. “Often you are starting with a blank sheet of paper and having to assess geographic, political, economic, and legal hurdles to bringing transactions to market.” The firm’s other major strength in Africa, project finance, dates back at least two decades. It also has run a small office in Johannesburg since 1995 handling mostly domestic projects, power, and financing work.
Elsewhere in capital markets, Jones Day, working out of its London and Dubai offices, advised underwriter Citigroup Global Markets Inc. in June on a $172 million rights issue by Kenya Airways Limited, the highest-value rights issue ever in East Africa. The firm’s M&A and dispute resolution groups have also been active, most recently advising Eurasian Natural Resources Corporation PLC on its $1.25 billion acquisition of First Quantum Minerals Ltd.’s Congolese mining assets and on ending a legal dispute.
Meanwhile, Shearman & Sterling, involved for decades in groundbreaking mergers and projects on the continent, recently bumped up its Africa visibility with the 2011 addition of Christophe Asselineau, an experienced Paris-based Africa-focused projects lawyer. Among other things, Shearman is advising Sundance Mineral Resources Ltd. on a $4 billion project for a new mine, railway, and port to develop an iron ore deposit straddling Cameroon and Congo. “There is no question that the level of African activity is growing,” Asselineau says. “And this is really cross-practice—not just projects work but increasingly finance, M&A, and international arbitration.”
Other firms have developed thriving Africa-focused niches around an individual lawyer. Hunton & Williams, led by longtime Africa hand John Beardsworth, has been regularly tapped by African governments and multilateral organizations for advice on negotiating major infrastructure and energy projects. Most recently, the firm was retained by three East African governments on plans for a shared hydropower plant. It also recently advised on the development and financing of an undersea fiber optic cable system connecting eight African nations to Europe and Asia.
Milbank, Tweed, Hadley & McCloy, meanwhile, has been busy in African project finance work for more than a decade, but it has a new prominence in the African telecom sector. In 2009 Milbank helped Bharti Airtel Limited finance its 2009 acquisition of Zain Group Holding Bahrain S.P.C.’s mobile operations in 15 African countries; and in 2010 and 2011, it advised O3b Networks Limited on some $1.3 billion in financing for new satellites to bring high-speed broadband to new parts of Africa. “It’s the sort of pan-African project that makes you understand why you do this job,” says Cathy Marsh, head of Milbank’s English law mining practice. Companies like O3b are “bringing the world to great swaths of the continent.” In the past few years, Milbank has been advising on both African M&A and cutting-edge high-yield and leveraged finance deals.
Some oil and gas firms have used their specialty to springboard into wider African involvements. Vinson & Elkins, for instance, has handled several billion-dollar-plus African deals, including U.K.–based Tullow Oil plc’s sale in February of $2.9 billion in interests in production-sharing contracts to Total SA and Cnooc Limited. V&E has also been representing Helios Towers Africa LLP, an investment held by George Soros and Lord Rothschild, in acquiring telecom towers across Africa.
Though Africa is viewed as an increasing part of many U.S. firms’ strategic plans, some say they are not considering opening offices. “It works very well for us to do the work from our current locations,” says V&E’s Msimang, noting that the firm’s clients for the most part are based in London, the Middle East, and Asia. Anyway, he notes, “African national oil companies and governments are increasingly coming to Europe and the Middle East to negotiate” deals and capital raisings. “For most, this isn’t the first time they’re negotiating an international contract. They’re heading into the next phase.”