After decades of heavy leftist government intervention into private business, Argentina’s international legal practices have been returning to life under the pro-business administration of Mauricio Macri, elected to the presidency in 2015.
Capital markets, project finance and energy practices are thriving, and those focusing on public-private partnerships, private equity, compliance and M&A are expected to grow with the government’s planned infrastructure and transportation improvements, the strengthening of anti-corruption laws, and private-sector demand for mining development.
“I cannot imagine how this could be going any quicker or better given the history,” says Miami-based Carlos Viana, head of White & Case’s Latin America, energy, infrastructure and project finance practices. “Together with Mexico, Argentina is the most exciting and happening combined energy and infrastructure market in Latin America—by a lot.”
Capital market practices took the lead after Argentina reached an agreement last year with bondholders and paid off long-standing debt that had kept it out of capital markets. A subsequent $16.5 billion sovereign debt offering in April 2016 set a record for a emerging market debt sale and attracted strong investor interest.
“A high percentage of the investments are going to the financial markets as a consequence of the high yields of the financial instruments offered by the Argentine government,” says Miami-based Holland & Knight partner Norberto Quintana.
While investors are still held back by political risk and inflation, both factors appear to be improving. If the October congressional elections go well for Macri supporters, as many expect, it will signal a longer period of policy certainty than Argentina has had in many years, Argentine lawyers say.
“For the first time in modern history you’ll have four years of not having to wait and see,” says Javier Errecondo, a founding partner of 26-lawyer Argentine firm Errecondo, Gonzalez & Funes Abogados. “For business, you can tell what the policy is going to be for at least four years. The policy will be No. 1 to support private investment, support private companies.”
Project finance is extremely active, Viana says. White & Case is working on several project finance deals and he and others see great potential for practices that involve equity investment and mining within the next five years.
Argentina has the world’s largest deposits of lithium, which is in high demand as a key raw material of batteries used in renewable energy. Argentina also has some of the largest shale oil and gas deposits in the world.
The government is also developing a public-private partnership program to attract foreign investment, Viana says.
While Argentina was isolated from international capital markets for years, some firms lost their capital markets and M&A expertise to attrition and time, lawyers say. Now the trend is reversing.
“All the big law firms are shoring up their M&A teams,” says Gustavo Boruchowicz, managing partner of Baker McKenzie’s long-standing Buenos Aires office.
Errecondo says he has been busy in capital markets and shares clients with U.S. firms such as Cleary Gottlieb Steen & Hamilton; Milbank, Tweed, Hadley & McCloy; Shearman & Sterling; Clifford Chance; Linklaters; and Simpson Thacher & Bartlett. Holland & Knight, which has handled numerous sovereign and provincial bonds for Argentina, reports that it has worked across from some of the same Magic Circle firms on various deals.
“There’s no need to open an office in Argentina right now because the amount of business you can get in Argentina right now doesn’t justify a move,” Errecondo says.
Cleary Gottlieb, working as CGSH International Legal Services in Buenos Aires, does have an advantage in being the only U.S. firm with a local office specializing in New York law, lawyers said. Baker McKenzie has an office in Argentina too, but it only practices Argentine law.
One local firm managing partner says many established Argentinian firms are wary of allying with a foreign firm because of the near-certainty of losing referrals from other international firms.
“There will be political ups and downs, but no country of which I am aware has as many underdeveloped natural resources and underutilized human capital as Argentina,” Viana says. “If we assume that political risk has already touched bottom, it’s all upside.”