IFLR 1000
The Guide to the World's Leading Financial Law Firms

The firms that feature in Peru's market for transactional work tend to be local in the sense that most are not directly affiliated with an international firm's network. There are international firms with a presence in the country, but almost all of the major financial firms are Peruvian in origin....

The firms that feature in Peru's market for transactional work tend to be local in the sense that most are not directly affiliated with an international firm's network. There are international firms with a presence in the country, but almost all of the major financial firms are Peruvian in origin.

As a legal market and as an economy, Peru is seen as being very similar to countries like Colombia and Chile. That is part of the reason that the three countries have joined one another in efforts like the MILA Stock Exchange, which is an attempt to regionalise securities and financial instruments across countries with similar political and legislative environments.

As a result of the above, Peruvian attorneys deal extensively with regional investments and have a high degree of familiarity with foreign investors, especially considering the large amount of inbound investment the country is currently experiencing. All major financial firms in Peru have attorneys that speak two or more languages, almost all of them have lawyers who have studied or practiced abroad and all are accustomed to large-scale and complex financial work.

However, like the other countries mentioned, there is not yet extensive specialisation among law firms in Peru. The market for different types of work and more sophisticated types of transactions is definitely growing though and certain firms are beginning to distinguish themselves in specific areas. The next few years may hold a great deal of importance with regard to which of the country's firms is best suited for a deal in a particular industry or market sector.

Social pressures are a big problem in the country as there are a number of indigenous peoples. Projects are often postponed or altogether eliminated if the concerns of community residents or environmental expectations are not met. Nearly every transactional firm in Peru has the capability to navigate these potential entanglements and, in that sense, may be slightly more familiar with local restrictions than a branch of a global firm.

MAJOR LEGISLATION CHANGES

Consultation with Indigenous Peoples Law
Passed August 2011

CONTEXT AND TRENDS The economic outlook for Peru could hardly be better right now. The country is experiencing major inbound investment, a booming real estate market and a wave of general growth driven largely by high global commodities prices....

CONTEXT AND TRENDS

The economic outlook for Peru could hardly be better right now. The country is experiencing major inbound investment, a booming real estate market and a wave of general growth driven largely by high global commodities prices. Things are especially good right now, though, considering the apprehension that surrounded the 2011 election of President Ollanta Humala.

Humala's perception as a left-leaning political figure prompted the largest drop in the Lima Stock Exchange's history following his election. Many projects and planned transactions were held up during and immediately after the election, but Humala's business policies since taking office have eased investor fears and in fact have created a flood of work for financial firms: "It's really a booming market," one market attorney notes. "The amount of work is unlike anything we've ever experienced in both the volume of work and the type of transactions. We're doing international financing for Peruvian borrowers, we're doing local securities issuances, equity transactions, foreign securities issuances – everything is busy."

The biggest impediment to this boom has undoubtedly been the rising tide of social pressures in the country in recent years. Those social pressures prompted the passage of the Consultation with Indigenous Peoples Law in August 2011. The law applies to many types of proposed projects, but most specifically affects projects and investments in the mining sector and other extraction industries.

Put simply, the law requires that, for any proposed project, the company in charge of the project must coordinate with the government and secure what is commonly referred to as a "social license". This indicates approval by the local community or any indigenous peoples that they are satisfied that the project will not adversely affect their lives, their homes, or the environment. The new law represents a step forward in terms of environmental and social responsibility, but many firms are finding the approval process a frustrating one that can derail some transactions: "There are more approvals to get, more compliance to worry about in almost every sector," comments a partner. "Some of it has to do with compliance with international standards, which is good, but some investors won't wait for the approval process and sometimes it takes so long that the situation has changed by the time all of the social issues are worked out."

Despite these complications, the market in project finance is still moving, though with some difficulties. Many in the market are looking at the cash-heavy pension funds to finance important projects, especially those that address the country's growing infrastructure needs: "The pension funds have been told by the government that if they don't invest in infrastructure, the infrastructure won't be sufficiently funded," observes a market practitioner. "A $500 million trust has been set up that the pension funds made available to project developers. A lot of the money is still available – [however] the inability of the government to get projects established is creating a bottleneck in terms of the pension funds' ability to invest."

M&A work is another area where lawyers are witnessing an increase in mandates: "M&A here is very strong right now," another practitioner notes. "This year, 2012, in our experience, is one of the most intense years we've seen in a long time. There are many transactions that are ongoing – the volume of work is really high."

Some of that activity has to do with the general state of regional and international investment both coming into and going out of Peru, but some of it has to do with material changes in the economy. Many of the country's larger companies have been privately held family companies for the entirety of their existence. As the market in Peru opens up, many of those family companies no longer have the protection from takeover bids they had in the past, while others want to take advantage of the high prices they can currently get for selling their interests.

The changing nature of public and private companies in the country is driving a lot of work: "There is beginning to be a trend in IPO's in the last year or so," mentions one lawyer. "It's not only the economy's growth, it's people getting out of family-run operations. You'll see more in the next few years. So far it's been mostly shares issued abroad, or done locally but wrapped in an ADR".

Capital markets in general is an area on the rise: "It's much stronger in Peru right now than it has been," says one partner. "The volume of work in that area is very large – banks are issuing securities, and you see non-banking clients tapping the 144A market too."

MAJOR LATERAL HIRES

Juan García Montúfar
From: Rubio Leguía Normand
To: Anglo American (in-house)

Jorge Lazarte
From: Payet Rey Cauvi
To: Interbank Group (in-house)

Daniel Abramovich
From: Payet Rey Cauvi
To: Endesa Group (in-house)

Italo Carrano
From: Miranda & Amado
To: Payet Rey Cauvi