A Southeast Asian Hedge?
When the flow of deals began to slow in Asia in late 2011, with both mergers and acquisitions and capital markets work seeing significant declines, one region managed to sidestep that downturn.
“The significant exception was Southeast Asia, which remained relatively buoyant,” says Clifford Chance Asia managing partner Peter Charlton, pointing to the relatively high levels of activity in Singapore, Indonesia, Vietnam, Malaysia, Thailand and the Philippines.
“Given that trend, depending on the footprint of your firm, you probably would have experienced growth in Southeast Asia in the last 18 months relative to the rest of Asia,” he says.
That time period has seen several large transactions in Southeast Asia. Last year Duane Morris’ Singapore joint law venture represented Heineken N.V. on its successful $4.6 billion bid for Asia Pacific Breweries Ltd. from conglomerate Fraser & Neave. Baker & McKenzie is currently advising Thai retailer CP ALL Pcl. on its $6.6 billion purchase of discount warehouse chain Siam Makro Pcl. And Allen & Overy is advising the Bank of Tokyo-Mitsubishi UFJ Ltd. on its proposed $5.75 billion acquisition of a majority stake in Bank of Ayudhya Plc., Thailand's fifth-largest bank.
But can an uptick in Southeast Asia really make up for a slowdown in China?
Charlton, along with the other partners interviewed for this story, declined to discuss hard numbers earned by his firm in Asia. But he did say that the firm’s percentage of revenue growth in Southeast Asia between 2007 and 2012 outpaced that of Asia as a whole.
In an interview with the Am Law Daily in July, Allen & Overy global managing partner Wim Dejonghe credited the firm’s expansion in Southeast Asia with helping to offset slowness in China and Hong Kong. He said the firm was looking at a number of emerging markets with higher growth potential, citing office openings in Turkey and Morocco along with Southeast Asia.
Allen & Overy Hong Kong partner James Grandolfo, whose capital markets practice focuses largely on Southeast Asia, says an overemphasis on China may have hurt some firms.
“Other firms that have come out here have shown a big commitment to China, but that may not have been the best strategy because it hasn’t been that busy,” Grandolfo says. “But Southeast Asian markets have been busier, at least on capital markets side.”
Jones Day Singapore managing partner Sushma Jobanputra says expansion in Southeast Asia is a classic hedge for firms. Like any good portfolio manager, she says, law firms need to diversify.