What Auckland’s new office means for project finance opportunities

by Sophie Schroder11 Aug 2014
It can’t be denied that the New Zealand PPP market is set to grow significantly - and when you add into that mix the variety of private project finance deals being done, you’re left with lucrative and exciting opportunities.
 
And with only a handful of law firms with well-established project finance specialities, competition will be sure to heat up.
 
The opening of Anderson Lloyd’s Auckland office – the firm's first move into the North Island in its existence – is also well timed to take advantage of this growing market.
 
The three new partners left their previous practice to open the Auckland office, and will now be leading a primarily transactions-focused practice, concentrating on corporate, mergers and acquisitions, banking and finance, infrastructure and public private partnerships (PPPs).
 
These specialisations will be supported by the strengths of the wider firm in environmental, planning and natural resources; corporate and commercial; property; insurance; energy; agribusiness and irrigation.
 
One of the new partners, Geoff Busch, previously told NZ Lawyer that the new office will provide healthy competition in the legal market place, especially given that its lower cost base in the South Island will allow the firm to provide cost-effective legal services in the big smoke.

“I think we’ll have our own niche. I don’t think there are any other firms like us in the Auckland market. There are the Big Three who are all fantastic quality firms, and then a number of very high quality boutiques but who don’t offer full service and have to link up with other firms for, say, M+A transactions,” says Busch. “We’re like a boutique that can offer full service, on a value for money basis.”

He says such an entrant into Auckland is long overdue, and he’s already had a number of current and prospective Anderson Lloyd clients saying the market is “crying out” for a service offering of this nature.
 
NZ Lawyer also spoke to Tom Fail, a Minter Ellison Rudd Watts’ partner with more than 12 years’ experience across general banking, corporate finance and project and construction finance matters; about what the new office could mean for the booming project finance market here.
 
He says that the move has just shifted the expertise from one firm to another and thinks that the “core” expertise is still held in only a few firms, including both Minters and now Anderson Lloyd.
 
“There will be [a shakeup] but it will be limited. The project finance market is quite specialised,” he told NZ Lawyer. “We often work on the same projects [as the new Anderson Lloyd team], but my personal view is I’m always pleased when they are on the other side because I know what they’re doing, and I’m sure that view is reciprocated by them.”

Project finance is most suited to larger firms with wider capabilities, says Fail, and he doesn’t predict much of a market threat emerging from boutique firms expanding into that field.
 
“I think the term boutique doesn’t sit that well for project finance.  While most of the core work on projects is done by project specialists, a lot of input is needed from other practice areas.  Property, resource management and tax are examples,” he says.
 
But Fail does think a shift towards project finance expertise growing from within the firms rather than being imported will start to emerge.
 
This has already happened at Minters, he says, where the firm has seen its project finance specialists growing their teams and depth to the point where they can work on multiple roles at the same time.
 
A current threat comes from the Australian firms that are now competing in the New Zealand project finance space, says Fail.
 
It can be disappointing to see these firms winning projects when our New Zealand practitioners working in the sector are perfectly capable and have a track record of leading projects, he says.
 
“The reality is the NZ market has the expertise and the capability to do the work on these deals and we typically have cheaper hourly rates,” says Fail. “I think it’s incumbent on the NZ specialists to get out there and promote themselves.”
 
Two Australian firms played a significant role in the recently completed Transmission Gully PPP – New Zealand’s largest PPP ever.
 
For this $1 billion deal, Aussies King & Wood Mallesons and Herbert Smith Freehills had a heavy involvement, representing the banks and the sponsors respectivley.
 
The two worked alongside a variety of Kiwi firms, including Simpson Grierson, Bell Gully, Russell McVeagh and Chapman Tripp.

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