Project Finance: If You Finance It, They Will Come

, The American Lawyer

After a one-year dip in deal value in 2009, project finance bounced back to hit a new record of $354.6 billion in 2010, up 22 percent from the prior year. That figure topped the previous high of $320.5 billion in 2008, according to Dealogic. Total 2010 deals jumped to 852--a 20 percent year-over-year rise.

Among Am Law 100 firms, White & Case placed highest in the league tables at sixth, with deal value of $11 billion via 35 deals. Milbank, Tweed, Hadley & McCloy placed one spot lower at seventh, with $10.3 billion on 38 deals. Latham & Watkins, the top firm in 2009, ranked ninth, with $9.9 billion in deal value on 40 deals.

Virtually all geographic regions saw an increase in deal value. The lone exception was Latin America/the Caribbean, which was off by 44 percent from 2009, with just $19.2 billion in deals. Asia was the busiest region, with $129.8 billion worth of deals--the majority came from the leading nation for project deals, India. In 2010 India saw 163 deals announced with a value of $81.4 billion, up 50 percent from 2009. (By comparison, the second-busiest nation, the United States, saw $33.3 billion in value with 81 deals.) Further evidence of Indian ascendance: The State Bank of India sat atop both the mandated arranger and financial adviser league tables, and 240-lawyer Indian firm Luthra & Luthra topped all legal advisers by handling $23.3 billion in deal value on 25 deals in 2010.

It's not just the number of deals driving the Indian market, but also the size of those deals. Luthra & Luthra advised on two of the ten largest project deals announced in the world last year. The firm represented a consortium of 27 lenders in KSK Energy Ventures Limited's $3.4 billion deal to fund a 3,600-megawatt coal-based thermal power project near the village of Nariyara, India. It was the seventh-largest deal announced in the world last year. Luthra also represented the lenders in Videocon Telecommunications Limited's $3.1 billion project to create a digital mobile network in large cities across the country.

"I don't see any letup for the next ten years," says Luthra & Luthra name partner Rajiv Luth­ra. "India right now needs almost $750 billion to $1 trillion in investment just to remain at an even keel with our infrastructure." Although international firms get involved in Indian project deals where there is cross-border financing, Luthra says there's a healthy appetite in the Indian debt and capital markets to fund deals domestically. "A lot of foreign borrowing is not required," Luthra says. That means that for now, a lot of foreign lawyers are left outside India, looking in.


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Illustration by Eva Vazquez