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

The French legal market has seen a number of changes in recent years, most notably a proliferation of smaller domestic firms coupled with a drive from mid-sized French firms to compete at the higher ends of the corporate finance market. One particular note would be the changes in the capital markets, where trends, which have made the US market more attractive to a number of issuers as an alternative to Europe, have developed a bigger market in US registered issuances....

The French legal market has seen a number of changes in recent years, most notably a proliferation of smaller domestic firms coupled with a drive from mid-sized French firms to compete at the higher ends of the corporate finance market.

One particular note would be the changes in the capital markets, where trends, which have made the US market more attractive to a number of issuers as an alternative to Europe, have developed a bigger market in US registered issuances. The market has quickly as a rival to the Eurobond market.

CONTEXT AND TRENDS
The banking sector in France very much reflects the trends in the rest of Europe. "Deals take longer, banks are very cautious and decisions are going up the chain of authorisation," says one partner....

CONTEXT AND TRENDS

The banking sector in France very much reflects the trends in the rest of Europe. "Deals take longer, banks are very cautious and decisions are going up the chain of authorisation," says one partner.

French banks in particular have tightened their grip on the purse strings, with "a whole raft of second tier banks in France going through all sorts of problems," according to one lawyer and some commentators note that the gap left by this retreat has been taken up by foreign banks, notably Japanese banks.

One consequence of this has been the development of the capital markets as an alternative source of financing. "There is far more interaction between bank debt and capital markets, we see it every day, it means you need a first class derivatives team, debt, equity capital markets… these are the firms that would succeed," says one partner.

This trend of combined financing is set to keep growing and talk continues of the growth of 'shadow banking'. This latter development has a strong obstacle in France as the banking sector has a tightly regulated monopoly on lending, however there have been a prevalence of deals in which banks are playing the role of arrangers.

In terms of activity, consensus is that the market produced fluctuating levels of work. There was "a surge from banks themselves to raise liquidity through the purchase of portfolios for instance," says one partner. Another says: "There were some LBOs and some distressed deals and covenant resets and also some LBO work by non-French banks but all in all a very mixed bag".

MAJOR LATERAL HIRES

James Butters
From: Clifford Chance (London)
To: Clifford Chance (Paris)

Hubert de Vauplane
From: Crédit Agricole
To: Kramer Levin Naftalis & Frankel

Nathalie Hobbs
From: Linklaters (Paris)
To: Linklaters (Hong Kong)

Gilles Pegney
From: White & Case
To: Retirement

Arnaud Fromion
From: Linklaters
To: Shearman & Sterling

Charles Viggers
From: Clifford Chance
To: Watson Farley & Williams

Eric Villateau
From: SNR Denton
To: Watson Farley & Williams

RISING STARS

Allen & Overy
Carine Chassol
Adrian Mellor

Linklaters
Kathryn Merryfield

Clifford Chance
Frédérick Lacroix
Jonathan Lewis
Daniel Zerbib

De Pardieu Brocas Maffei
Olivier Hubert

Herbert Smith Freehills
Régis Oréal

CONTEXT AND TRENDS
The equity capital markets in France as in the rest of Europe were "challenging", according to partners, who comment that "the market in Europe for large IPOs is gone and most of the deals are on hold or have been cancelled, it is too volatile". However it is not all doom and gloom....

CONTEXT AND TRENDS

The equity capital markets in France as in the rest of Europe were "challenging", according to partners, who comment that "the market in Europe for large IPOs is gone and most of the deals are on hold or have been cancelled, it is too volatile".

However it is not all doom and gloom. Partners note what one calls a "front end of a wave of renewed interest in tech IPOs and companies looking at a higher valuation in Hong Kong (come and gone) and in the US". The Facebook IPO, widely interpreted as short of a success, did not help this budding tech IPO environment.

The equity market has seen a number of IPOs, rights offerings and block trades. The latter especially have been more prevalent due to a "need to improve balance sheets," says a partner. "These became increasingly difficult in 2012 but the market was quite good until May and June, with the stock exchange going up".

The development of an alternative market has not yet taken off.

On the debt side, the market was "active in a classic way, with EMTN programmes" says a practitioner. Lawyers also noted an increase of interest in the US market and hence there was a steady flow of work on SEC registered Rule144A issuances. French domestic deals on the other "have disappeared".

"Clients are looking at the bond market rather than bank market, banks have closed off the spigot as it were and are deleveraging; there's a lot of Yankee bond activity and the US market seemed attractive," says a partner.

MAJOR LATERAL HIRES

Marc Castagnède
From: Debevoise & Plimpton
To: Allen & Overy

Aline Cardin
From: Shearman & Sterling
To: Clifford Chance

Jacques Naquet-Radiguet
From: Shearman & Sterling
To: Davis Polk & Wardwell

Patrice Doat
From: Gide Loyrette Nouel
To: Linklaters

RISING STARS

Clifford Chance
Cédric Burford
Frédérick Lacroix

Freshfields Bruckhaus Deringer
Fabrice Grillo
Dougall Molson

Gide Loyrette Nouel
Arnaud Duhamel

Linklaters
Séverin Robillard

Orrick Rambaud Martel
Alexis des Grottes

Sullivan & Cromwell
William Torchiana

CMS Bureau Francis Lefebvre
Grégory Benteux
Marc-Etienne Sébire

CONTEXT AND TRENDS
The M&A market, according to some lawyers, was effected by the French presidential elections in the spring of 2012. "The election has been especially brutal… a change in direction, left wing oriented parliament… the attraction of France to foreign investors is not so clear, especially to US investors, and this perception won't be improved," says one partner....

CONTEXT AND TRENDS

The M&A market, according to some lawyers, was effected by the French presidential elections in the spring of 2012. "The election has been especially brutal… a change in direction, left wing oriented parliament… the attraction of France to foreign investors is not so clear, especially to US investors, and this perception won't be improved," says one partner.

The key issue on the minds of investors is the question of tax and deductibility of interest on LBOs. Practitioners were asking a number of questions about how the different tax regimes might affect both future and existingtransactions for example with LBO financings that were agreed in 2006, 2007 and 2008.

According to one partner however, the real issue is simply that "the elections meant that it was not a great time for investors to take investment decisions" and the more bullish commentators argue that whatever the tax changes the market will just have to adapt and carry on.

Lawyers noted a number of divestments by private equity players and "a lot of companies on 0% growth", added to which the lending market had slowed down with banks unable to finance LBOs and being more stringent on credit. The effect was that firms were handling mixed deals: "Very diversified deals: disposals, acquisitions, divestments, Franco-French, and international".

In terms of private equity, some practitioners noted a good level of volume of deals at the mid-cap range in 2011, "however in 2012 the Argos Index has started to register a dip in activity, nevertheless the private equity market is 75% in the mid-cap area," says a partner. Others estimate that private equity as a source of activity in the M&A market may have dropped by as much as 40 percentage points, from 50% to 10%.

MAJOR LATERAL HIRES

Mathieu Remy
From: Shearman & Sterling
To: Clifford Chance

Jacques Naquet-Radiguet
From: Shearman & Sterling
To: Davis Polk & Wardwell

Hervé Pisani
From: Darrois Villey Maillot Brochier
To: Freshfields Bruckhaus Deringer

Bertrand Delafaye
From: Orrick Rambaud Martel
To: McDermott Will & Emery

Antoine Vignial
From: Freshfields Bruckhaus Deringer
To: Saint-Gobain (Secretary General)

Nicolas Bombrun
From: Latham & Watkins
To: Shearman & Sterling

RISING STARS

Bredin Prat
Olivier Rogivue
Olivier Saba

Cleary Gottlieb Steen & Hamilton
Jean-Marie Ambrosi

Clifford Chance
Gilles Lebreton
Mathieu Remy

Darrois Villey Maillot Brochier
Bertrand Cardi

Davis Polk & Wardwell
Jacques Naquet-Radiguet

Freshfields Bruckhaus Deringer
Fabrice Cohen

Linklaters
Alain Garnier
Marc Loy

SJ Berwin
Christophe Digoy
Jérôme Jouhanneaud

Sullivan & Cromwell
Olivier de Vilmorin

Weil Gotshal & Manges
Agathe Soilleux
Arthur de Baudry d'Asson
Jean Beauchataud

Shearman & Sterling
Guillaume Isautier

De Pardieu Brocas Maffei
Patrick Jaïs
Jean-François Pourdieu
Guillaume Touttée

Paul Hastings Janofsky & Walker
Olivier Deren
Alexis Terray

CMS Bureau Francies Lefebvre
Jean-Robert Bousquet

Franklin
Yam Atallah
Alexandre Marque
Mark Richardson

CONTEXT AND TRENDS
"The project finance market has suffered from the same difficulties as the banking market: Basel III and capital requirements make it unattractive to engage in long term loans," says one partner, while another adds that "banks simply cannot stand long term maturities". Added to this the presidential elections in spring meant the freezing of some projects for a few months....

CONTEXT AND TRENDS

"The project finance market has suffered from the same difficulties as the banking market: Basel III and capital requirements make it unattractive to engage in long term loans," says one partner, while another adds that "banks simply cannot stand long term maturities". Added to this the presidential elections in spring meant the freezing of some projects for a few months.

On the domestic market, according to partners the new French government is "less warm to the idea of public-private partnership (PPP) projects with an 'not in favour but need them' attitude".

"As a consequence the French authorities are working to develop project bonds," says one partner. In 2011 there were a number of large PPP projects, most notably in relation to the construction of the high speed rail line to Bordeaux, but practitioners note that most big French PPP deals are finished for the time being and that the activity was at a mid-cap level in terms of education facilities, prisons, and healthcare.

Practitioners overall highlight two trends. The impact of Basel III, which is leading to a refocusing onto project bonds and fuelling PFI (private finance iniatives) in the energy market; and the uptick of projects in Africa.

"The attitude to political risk in Africa changing, people are much more bullish over infrastructure and natural resources and there is a growing share of clients from Asia; so the client base is broader and the same is happening in central Europe," says a partner.

Paris, as a hub for transaction into Francophone and the non-Francophone Africa, has kept firms busy with deals on the continent, from mining to infrastructure and greenfield and brownfield projects. "There is certainly activity in South Africa in the renewables space and there is very strong activity in Nigeria, Morocco and Mozambique, but it is quite balanced throughout the continent," says a partner.

RISING STARS

Allen & Overy
Shaun Beaton

Clifford Chance
Daniel Zerbib

Gide Loyrette Nouel
Thomas Courtel
John Crothers

White & Case
Jacques Bouillon
Victoria Wescott

Herbert Smith Freehills
Eric Fiszelson

Willkie Farr & Gallagher
Driss Bererhi

CONTEXT AND TRENDS
Pressure is piling into the restructuring and insolvency field. "The question is whether there is a bubble that will burst or whether it will be handled in a controlled way," says one practitioner....

CONTEXT AND TRENDS

Pressure is piling into the restructuring and insolvency field. "The question is whether there is a bubble that will burst or whether it will be handled in a controlled way," says one practitioner.

"We are now seeing bail outs of bail outs and restructurings of restructurings," says another partner, adding that "now there is a great chance of non-consensual restructuring due to the pressure by Basel II and a half, let alone III, and things are getting a little messier. Domestically the credit crunch is going very much into the ability of banks to provide liquidity".

The Interministerial Committee of Industrial Restructuration (CIRI) oversees bankruptcy and insolvency cases in France, which saw a wave of work post Lehman and, according to one partner, a stay of execution for debts maturing in 2012 thanks to low interest rates.

Companies that used the French sauvegarde (safeguard) proceedings are in a better position than those that did not when they should have done, say practitioners and generally there is an expectation that the firm will see an increase in insolvency work in the coming year.

MAJOR LATERAL HIRES

Gabriel Sonier
From: Sonier & Associés
To: Salans

Caroline Texier
From: Sonier & Associés
To: Salans

Bertrand Chauchat
From: Sonier & Associés
To: Veil Jourde

RISING STARS

De Pardieu Brocas Maffei
Matthieu Barthélemy

Gide Loyrette Nouel
Marie Carla-Conti

Weil Gotshal & Manges
Fabienne Beuzit

Linklaters
Cécile Dupoux