A fine tradition
CMS Cameron McKenna has had a presence in Poland for almost two decades, and today the firm is the largest international law firm in Poland, with more than 120 lawyers19/11/2008 | By Lyndon Driver
Supported by the network of other CMS Cameron McKenna’s offices in Central and Eastern Europe and the UK, and an even wider network of CMS offices in 28 jurisdictions around the world, CMS Warsaw is able to deliver a seamless, client-focused range of legal services.
CMS Warsaw is able to provide outstanding legal services to clients operating in various industry sectors including energy, insurance, life sciences, real estate and the technology media and telecoms (TMT) sector. Core areas of legal expertise include banking and finance, capital markets, commercial, corporate, dispute resolution, intellectual property, mergers and acquisitions, private equity and project finance.
The firm’s capital markets practice in the Warsaw office is headed by Dariusz Grestza, who is assisted by corporate partner Rafal Stroinski and senior associates Ewa Szlachetka and Beata Binek.
Public markets
Following years of successful listings, the current climate for IPOs has diminished slightly in recent months, as investors have become less enthusiastic about the prospect of a public listing. On the flip side, the few companies that have elected to list their shares on Warsaw Stock Exchange (WSE) in the current market are diligent in their preparations, which should ultimately strengthen the position of the WSE in the region. In this respect in spite of the dip in the number of companies coming to market, today the quality of listings is somewhat higher than in previous years.
Historically, CMS has a strong tradition of working with companies to achieve public listings. Recent examples include assisting oil refinery Lotos Group in preparing for its IPO on the WSE, advising a Polish minority shareholder in the sale of a 13.57 percent interest in Telekomunikacja Polska SA (TPSA) to France Telecom, in what was the largest transaction on the WSE in 2004, and representing HSBC Investment Bank on the issue of shares in Powszechny Bank Kredytowy SA, including the issue of Global Depository Receipts listed on the London Stock Exchange.
In preparation for a renewed interest in the public markets, CMS Warsaw is ramping up its capital markets practice, having recently appointed a senior associate with five years experience working for the legal department of the Polish Financial Supervisory Authority (formerly the Polish Securities and Exchange Commission).
Private equity
The potential for private equity in Poland in the current climate is strong. Although valuations of shares in the majority of companies has declined significantly in the wake of recent events in the global financial markets, the credit crunch has not affected the Polish economy as seriously as it has other neighbouring states, and as such there continues to be potential for growth of Polish enterprises, which can be currently bought at a discount price.
In terms of secondary buyouts, the Polish market is relatively young compared with its Western European neighbours; where there is latent potential for this type of transaction these opportunities have not yet been tested fully. However, as the vast majority of the buyouts we have seen so far have involved innovative companies – for example in the TMT and IT sectors – it is likely that any future secondary buyout market will arise from these sectors also.
Furthermore, there have been an increasing number of public-to-private transactions in recent months, driven principally by the fact that the share price of many public companies is relatively cheap, and as such there are bargains to be had for the prudent investor.
Notable transactions that CMS have worked on include 3TS Venture Partners’ acquisition of Learning Systems Poland, the institutional acquisition of TGI Friday’s Central European Franchise and CAIB’s structuring of the $20m first LBO transaction in Poland. Furthermore, the firm represented a consortium comprising international private equity giant Hicks Muse Tate Furst, together with the AIG Emerging Europe Infrastructure Fund and Argus Capital in its acquisition of Aster City Cable.
In particular the firm has worked closely with Warsaw-based private equity firm Enterprise Investors, advising, for instance, on the acquisitions of DIY store Nomi and furniture manufacturer Gamet, and also the de-listing of Sfinks SA. In addition, CMS advised the institutional investor on the $35m sale of a majority stake in Polar, a Polish white goods company listed on the Warsaw Stock Exchange, to Brandt.
Cross-border expertise
Polish businesses have become increasingly involved in cross∞border transactions since the country’s accession to the European Union in 2004. Since the early 1990s, foreign investors have invested more than $85bn in Poland, which has placed it as number one destination for foreign investment in the Central and Eastern Europe region. The US, Great Britain, Germany, Japan, France, Spain, China and even Middle Eastern countries have all made significant investments to Polish businesses. Similarly too, Polish companies have invested particularly in former Soviet Union countries and each year more and more in Western European countries.
CMS’s cross-border experience includes advising MOL Hungarian Oil & Gas Company on the planned merger with PKN Orlen, representing Kulczyk Holding on the sale of shares in Telekomunikacja Polska SA to France Telecom, working with Chrobry, a Polish consumer finance agent, on the sale of the company to GE Capital, with Carlsberg on the acquisition of Okocim SA and on the acquisition of breweries from Bittburger and Piast and advising Nordea Group on the acquisition of Sampo Pension Fund and Sampo Life Insurance companies in Poland.
There are several key issues that need to be addressed when handling international M&A transactions, the first and foremost involves minimising the risks which can arise during and after the transaction. It is also important to structure the deal in the most efficient way with respect to the corporate and tax structures. Anti-competition is also high on the list.
In the current market the hottest sector – one that has attracted the most attention from investors – is the new technology sector, as Poland’s ambition is to evolve into a country where knowledge is the core of business. However, although the new technologies sector can be somewhat risky for investors, if managed correctly, it has the potential to offer better profits and better returns than many other traditional sectors.
Whereas the global economy has been hit by a very serious crisis, Poland has so far been relatively unaffected by the credit crunch. The assumption is that some economic slowdown will ensue, but taking into account CMS’s profile and the range of services provided, it is difficult to conceive that the slowdown will affect business to any great extent. Whereas the volume of work may dip across some practice areas, at the same time there is enough vested in those practices that by their nature flourish in less prosperous times.
Although CMS’s Warsaw office revenues peaked in 2007, the widely held opinion at the firm is that even more success is on its way. “The Polish legal market is becoming increasingly competitive,” says Grestza, “although it is as yet underdeveloped when compared to the UK legal market.”
“With the increasing number of new laws and regulations passed and adopted each day, together with the increasing complexity and sophistication of transactions, the demand for professional, top-tier lawyers is growing. Clients principally require a first rate service delivered by business-oriented, experienced and reputable lawyers, and we are happy and eager to meet those challenges.”
