Headwinds may have buffeted China’s economy in 2014, but the best deals took flight nonetheless, pushed aloft by the ingenuity of the law firms supporting them. Leo Long reports on those that separated themselves from the rest of the field

This was the year when tech truly moved to the fore, when Hong Kong cemented its unique offshore status and outbound activity accelerated to levels previously unseen. On the domestic front, look no further than Alibaba Group’s investment in Youku Tudou and JD.com’s partnership with Tencent to fathom the enthusiasm for this sector.

Alibaba’s US$1.22 billion acquisition of a 16.5% stake in Youku Tudou was one of the high-profile M&A deals of the year, which enabled Alibaba to accelerate its digital entertainment and video content strategy, while JD.com and Tencent’s multibillion-dollar partnership stretched the law firms involved on all aspects of M&A, antitrust and technology, media and telecoms (TMT) across several jurisdictions.

While on Alibaba, of course its $25 billion IPO on the New York Stock Exchange (NYSE) also ranks as a landmark deal. The largest IPO in financial history, smashing all records for a Chinese company listing in any market. Little more need be said. JD.com’s NASDAQ IPO also rates, while in overseas M&A the difficulties faced by Chinese companies in the tech sector were exemplified in Lenovo’s acquisition of IBM’s x86 server business. Stringent antitrust reviews and various moves by the US government raised questions that will likely continue to burden Chinese companies, given the cybersecurity concerns affecting the US-China relationship.

Other sectors also featured. COFCO’s acquisition of Noble Agri for US$1.5 billion represented the largest outbound acquisition so far in the food sector by a Chinese state-owned enterprise (SOE). Assisting law firms enabled Noble Agri to become the principal international origination platform for COFCO, with its upstream trading operations linked to the downstream processing and distribution capabilities of COFCO in China, creating a fully integrated value chain. Dongfeng’s equity investment in PSA Peugeot Citroen Group and was the biggest offshore acquisition for a Chinese SOE in the automobile industry and the largest investment by a Chinese company into France to date.

Hong Kong remained the destination of choice for China’s IPOs. Of note was China Cinda’s IPO on the Hong Kong Stock Exchange (HKEx). The inclusion of a calculated value report in an IPO prospectus was unprecedented, and this was the first state-owned Chinese asset management company to list in Hong Kong.

CITIC Group’s Hong Kong IPO, valued at US$37 billion, marked this massive transaction as a transformation of super-giant state-owned enterprises, while Bank of China’s issuance and listing of offshore preference shares was, among other things, the first Basel III compliant additional Tier 1 capital issuance by a PRC bank, and the first preference share issuance by a PRC company.

In antitrust, look no further than the GSK commercial bribery cases for a whiff of the future, while a low-value IP case win involving John Deere’s colour combination trademark infringement may also signal long-awaited changes in this sector.

The winning deals have, as in previous years, been chosen based on a number of factors, not just large monetary values. The overall significance, complexity and innovative nature of the deals were also considered, as well as the deal size and broader interests.

China Business Law Journal’s independent editorial team made its own choices on the deals that we felt were flying ahead of the field for the year. All winning deals and law firms chosen are listed in alphabetical order to avoid presumptions of ranking.

You can register for free to enjoy selected content, including this article, or subscribe to unlock all content.

If you are already a registered user or subscriber, login here.

该部分内容仅提供予《商法》注册用户。你可以免费注册去浏览该部份内容(包括这篇文章)。你也可以订阅去解锁所有内容。

如果你已经是我们的注册用户或者订阅会员,请在此登录:


Domestic M&A

Alibaba Group’s investment in Youku Tudou (US$1.22 billion)

Parties

Legal counsel

Alibaba Group

Fangda Partners

Simpson Thacher & Bartlett

Walkers

Youku Tudou

Maples and Calder

Skadden Arps Slate Meagher & Flom

TransAsia Lawyers

This acquisition, Walkers noted, was one of the most high-profile M&A deals in 2014. Its success was essential for Alibaba, adds Simpson Thacher & Bartlett, in order for it to extend its reach and accelerate its digital entertainment and video content strategy, as well as provide new products and services. “Alibaba’s investment will also strengthen Youku Tudou as China’s largest online video platform,” noted Youku CEO Victor Koo at the time the deal was agreed.

Alibaba’s Youku Tudou investment was the third major media acquisition by the company in what some media dubbed a buying spree, as the company sought to take on internet giants Tencent and Baidu. Alibaba bought a 16.5% stake in New York-listed Youku Tudou, with 2% owned by Yunfeng Capital, a fund co-founded by Alibaba chairman Jack Ma.

Simpson Thacher said Alibaba and Yunfeng Capital, through a joint investment vehicle, invested an aggregate of approximately US$1.22 billion to purchase a number of newly issued class A ordinary shares from the company at a purchase price per share corresponding to US$30.50 per American depositary share (ADS) of Youku Tudou, with each ADS representing 18 class A ordinary shares of Youku Tudou.

Berry Plastics Group’s acquisition of Qingdao P&B (value: N/A)

Parties

Legal counsel

Berry Plastics Group

Jun He Law Offices

This complex deal brought together a US industry leader keen on expanding into emerging markets and a target company with an unwieldly ownership structure that included an SOE and two BVI companies was an exercise in logistics, red tape clearing and negotiation for Jun He Law Offices.

Berry Plastics Group, a leading North American plastics company listed on the NYSE, acquired 75% equity in Qingdao P&B, a Sino-foreign joint venture company that specialises in plastic packing and paper manufacture. Jun He and Berry said the deal played a key role in the group’s strategic objective of establishing a business presence in emerging global markets.

The licensors that owned the target company’s stocks involved one SOE belonging to Wuliangye Group, as well as two BVI companies. Equity owned by SOEs should be publicly auctioned or offered in the property exchange in Yibin city, while the other registration agencies approving this acquisition are located in Qingdao. Based on the design of the framework agreement in the pre-transaction documents, the firm said a great deal of work was done with communications and negotiations among the different parties, as well as with relevant authorities governing SOEs, the Qingdao government and across different city departments, to enable the deal’s success.

Carlsberg Group’s acquisition of Chongqing Brewery (US$477 million)

Parties

Legal counsel

Carlsberg Group

Jun He Law Offices

Chongqing Beer Group

Shanghai K-Insight Law Firm

This acquisition was the first foreign strategic investment in the market implemented solely through a partial tender offer (PTO), establishing a vivid precedent for future cases to follow in the field of foreign acquisitions of PRC A-share listed companies, according to Jun He.

The firm said the deal overcomes uncertainty caused by the silence of foreign strategic investment regulations on the feasibility, corporate and regulatory approval procedure, and application documents for a PTO. Prior to this case, transfer by agreement and private placement were the only two means articulated in the foreign strategic investment regulations, and in practice, a PTO was used only once.

Jun He advised Carlsberg Group on the structuring, negotiation, documentation and regulatory procedures of the acquisition. In order to guarantee the success of the PTO, Carlsberg Group entered into a share transfer commitment agreement with Chongqing Beer Group (CBG) pursuant to which CBG undertook to sell all of its 20% stake in Chongqing Brewery to Carlsberg Group during the PTO.

Global Logistic Properties’ acquisition of a Shanghai R&D company (US$31 million)

Parties

Legal counsel

Global Logistic Properties

AllBright Law Offices

A Shanghai pharmaceutical R&D company

Beijing Kangda Law Firm

This acquisition was crafted as a “framework agreement plus formal equity transfer agreement”, which was based on various investigations and negotiations between both sides, AllBright Law Offices said. The framework agreement stipulated that the seller should make arrangements for restructuring and rectification work before signing the formal equity transfer agreement.

Global Logistic Properties (GLP) acquired 100% of the shares of the target company, a Shanghai pharmaceutical R&D company. The purpose of the acquisition was to allow GLP to construct and invest in an international supply chain management demonstration district in Shanghai Nanhui.

The acquisition involved many legal issues including corporate reorganisation, information disclosure of listed companies, and the reviewing of foreign-invested companies. AllBright said it negotiated with related government departments and assisted both sides by drawing up all transaction procedures. The firm also created a restructuring plan to assist contract completion through peeling of assets, liability satisfaction, idle land resolution, and IP transfer. The transaction documents contained many agreements including the framework agreement, equity transfer agreement, asset-stripping agreement, contract termination agreement, bank guarantee, etc., which were revised and negotiated almost 20 times, receiving much scrutiny from government departments.

JD.com’s partnership with Tencent (US$3-4 billion)

Parties

Legal counsel

JD.com Inc

Skadden Arps Slate Meagher & Flom

Zhong Lun Law Firm

Tencent Holdings

Davis Polk & Wardwell

Han Kun Law Offices

This acquisition represented a landmark strategic partnership in China’s fast growing e-commerce, mobile and internet industries, said Zhong Lun Law Firm, adding the deal covered all legal aspects of M&A, antitrust and TMT, as well as involving the jurisdictions of the PRC, the US, Hong Kong and Cayman Islands.

JD.com Inc, a leading online direct sales company in China, and Tencent Holdings, a leading internet company serving the largest online community in China, formed a strategic partnership to provide e-commerce services to mobile and internet users in China.

JD acquired 100% interest in Tencent’s QQ Wanggou business to business and Paipai customer to customer marketplace businesses, logistics personnel and assets, as well as a minority stake in Yixun, and entered into a strategic co-operation agreement with Tencent.

JD has the right to acquire the remaining stake of Yixun in the future. Furthermore, Tencent will support JD’s growth in the physical goods e-commerce business by offering level 1 access points in popular apps like Weixin and Mobile QQ. Both parties will co-operate on online payment services.

Trina Solar acquires 90% stake in Yunnan Metallurgical New Energy (US$36 million)

Parties

Legal counsel

Trina Solar

Dacheng Law Offices

The acquisition by Trina Solar, a world leading NYSE-listed photovoltaic company, of a 90% stake in Yunnan Metallurgical New Energy laid the basis for the companys involvement in a massive solar project in Yunnan province.

Dacheng said it conducted due diligence and legal risk control in connection with the acquisition, with a focus on issues such as sector and local policies, state-owned equity transfer, the use of collectively owned land for industrial purposes, and the mass use of forest land.

The deal helped the company expand its project business to Yunnan for its planned construction of a 300MW solar project, the largest utility-scale solar farm in Yunnan and one of the biggest in China. Forbes reported that the acquisition gave Trina an edge over its Chinese peers for the Yunnan project, owing to a stronger balance sheet and lower leverage.

Tsinghua Unigroup’s acquisition of RDA Microelectronics (US$910 million)

Parties

Legal counsel

Tsinghua Unigroup

Maples and Calder

Morrison & Foerster

Zhong Lun Law Firm

RDA Microelectronics

Conyers Dill & Pearman

Jun He Law Offices

Wilson Sonsini Goodrich & Rosati

This was the largest semiconductor company acquisition in the world in more than a year, Morrison & Foerster said, involving the co-ordination of large teams of lawyers across firms in China and the US. The sale of RDA to Tsinghua Unigroup was a showcase example of taking private transactions involving a NASDAQ-listed Chinese company and Chinese bidders, and has significantly influenced the PRC regulatory landscape for overseas acquisitions by Chinese companies, added Wilson Sonsini Goodrich &Rosati.

Tsinghua Unigroup, an operating subsidiary of Tsinghua Holdings, an SOE funded by Tsinghua University, was advised by Morrison & Foerster in the US$910 million acquisition of RDA Microelectronics, a China-based NASDAQ-listed fabless semiconductor company that designs, develops and markets wireless systems on chip and radio-frequency semiconductors.

Tsinghua and RDA amended the merger agreement to reflect the relaxation of regulatory requirements under the 2013 government-approved investment projects catalogue, which included that projects involving investment amounts between US$300 million and US$1 billion did not require approval from, and only needed registration with, the National Development and Reform Commission (NDRC).

Whirlpool’s acquisition of Hefei Sanyo (US$553 million)

Parties

Legal counsel

Whirlpool China Investment

Cleary Gottlieb Steen & Hamilton

Llinks Law Offices

Hefei Rongshida Sanyo Electric

King & Wood Mallesons

Tianhe Law Firm

This acquisition was the largest foreign investor’s acquisition of a listed company in 2014, according to Llinks Law Offices. The structure of the deal included the share transfer by agreement of a listed company and the private placement of the listed company. The preconditions of the implementation of the share transfer were that the private placement had been approved by all necessary regulatory authorities and had the approval of the China Securities Regulatory Commission (CSRC) on the tender offer waiver.

Whirlpool China purchased 157,245,200 of Hefei Rongshida Sanyo Electric’s shares from Sanyo Japan through a share transfer. Whirlpool China also subscribed 233,639,000 shares of Hefei Sanyo through private placement. Upon the completion of the acquisition, Whirlpool China owned 51% of Hefei Sanyo’s stock, becoming the controlling shareholder. The precondition for implementation of the private placement is that all of the shares held by Sanyo Japan be transferred to Whirlpool China, that and relevant procedures at the Depository Corporation be completed.

Links said the transaction required approval from several government authorities including the Anhui state-owned assets supervisory and administrative authority, antitrust authorities of the State Council, Ministry of Commerce (MOFCOM) and CSRC for private placement, and for the exemption from the obligation of making a tender offer. In this deal, legal services such as transactional structure analysis, conducting legal due diligence investigation, document drafting, negotiating and amending transactional agreements were provided by the firm.

Overseas M&A


CLP and CSG HK acquire a 60% stake in Castle Peak Power (US$3 billion)

Parties

Legal counsel

CSG HK

Cordells (Hong Kong)

Linklaters

CLP Holdings

Jingtian & Gongcheng

JS Gale & Co

This massive acquisition was the first time in the 47-year history of Castle Peak Power Company (CAPCO) that it has been subject to sale. The acquisition represented a significant China deal and a landmark M&A deal in Hong Kong due to its size, uniqueness, as well as the profile of the parties involved, according to Linklaters.

Linklaters advised CSG HK in the joint acquisition, together with Hong Kong’s largest electricity utility, CLP, of 60% of CAPCO, a joint venture partly owned by ExxonMobil Energy.

The firm said the transaction involved entry into a joint venture agreement among the parties for CAPCO, and renegotiation of CLP’s power purchase agreement and operating and maintenance agreement with CAPCO.

CNNC buys stake in Langer Heinrich Mine (US$190 million)

Parties

Legal counsel

China National Nuclear Corporation (CNNC)

Chambers & Company

Dacheng Law Offices

ENSafrica(Mauritius)

Hastings & Co

KOEP & Partners

Langer Heinrich Mine

Herbert Smith Freehills

Dacheng Law Offices says this transaction’s success is significant in involving a large SOE in offshore M&A activity, and effectively charting the course for other China SOEs or private enterprises as part of the nation’s “go global” strategy in cross-border transactions and resource investment. The transaction stretched across several jurisdictions.

On 18 January 2014, a subsidiary of the China National Nuclear Corporation (CNNC), a major nuclear power enterprise in China, and a subsidiary of Australian-listed Paladin Energy – Langer Heinrich Mine – signed an agreement enabling the former to acquire 25% equity in Langer Heinrich Mine for US$190 million.

As advisers for CNNC, Dacheng said the firm covered due diligence, transaction structuring, negotiations, translation and revision of documents, examination and approvals, recordal and delivery assistance, etc. The firm also advised on Chinese law and regulation, co-ordinating lawyers from Australia, Mauritius, Namibia and Hong Kong.

COFCO’s acquisition of Noble Agri (US$1.5 billion)

Parties

Legal counsel

COFCO Corporation

Clifford Chance

Walkers

Noble Group

Linklaters

The transaction is the largest outbound acquisition so far in the food sector by a Chinese SOE, and the largest outbound takeover from China in the agriculture sector, Walkers noted. According to Linklaters, this deal is emblematic of the increasing importance of the agricultural sector to global M&A, as companies and governments look for new ways to tap into global trade flows.

Clifford Chance and Walkers advised COFCO on its acquisition of 51% of Noble Agri, the agricultural platform of Noble Group. Linklaters said Noble Agri would become the principal international origination platform for COFCO, with its upstream origination and trading operations linked to the downstream processing and distribution capabilities of COFCO and its affiliates in China, to create a fully integrated value chain.

Dongfeng Motor’s equity investment in PSA Peugeot Citroen Group (US$2 billion)

Parties

Legal counsel

Dongfeng Motor Group

Clifford Chance

Commerce & Finance Law Offices

Slaughter and May

PSA Peugeot Citroen Group

Bredin Prat

Jun He Law Offices

Orrick Herrington & Sutcliffe

This transaction involved a top-tier foreign industry marque and was the biggest offshore acquisition for a Chinese SOE in the automobile industry, according to Jun He. It also the largest investment by a Chinese company into France to date, noted Clifford Chance.

In a signed memorandum of understanding (MoU), Dongfeng Motor Group and France agreed to inject approximately 1.6 billion (US$2 billion) into PSA. After closing, the deal left PSA with three equal partners – Dongfeng, the French government and the Peugeot family – holding the same number of shares in PSA.

Dongfeng and PSA also signed a partnership agreement to bolster R&D in a new joint venture enterprise, Dongfeng Peugeot Citroen Automobile Company. Jun He said the outbound part of the transaction involved several acquirers. The inbound part involved the establishment and design of R&D centres, complex structures for sales companies, and multiple legal matters in areas such as foreign investment, tax, intellectual property and labour.

Lenovo’s acquisition of IBM’s x86 server business (US$2.1 billion)

Parties

Legal counsel

Lenovo

Cleary Gottlieb Steen & Hamilton

Covington & Burling

IBM

Cravath Swaine & Moore

Hogan Lovells

O’Melveny and Myers

The transaction was one of the most significant that the Committee on Foreign Investment in the US (CFIUS) has reviewed in recent years, said Covington & Burling. Cleary Gottlieb said the acquisition built on a longstanding partnership between IBM and Lenovo. Hogan Lovells added the deal was subject to approval by US antitrust authorities as well as MOFCOM, the European Commission, and several other antitrust agencies around the world.

CFIUS cleared Lenovo Group’s bid to acquire IBM’s x86-base server business in a US$2.1 billion acquisition, lifting Lenovo in the global x86 server business from number six to number three. Covington said the transaction touched on important policy and legal issues, including: to what extent should governments erect security requirements based on the nationality of IT companies; and will the US remain open to investment by transparent, multinational IT companies that originated in China, given the cybersecurity concerns affecting the US-China relationship.

These points were made more challenging by events during the CFIUS reviews, including US government leaks and the US government’s indictment of five PLA officers on hacking charges. Hogan Lovells used its antitrust, competition and economic regulation lawyers from Washington DC, Brussels, Beijing and Johannesburg to advise IBM on the antitrust issues in the deal on a worldwide basis.

MMG’s acquisition of Las Bambas (US$7 billion)

Parties

Legal counsel

MMG and the consortium

Dentons

Estudio Rodrigo Elias & Medrano

Freshfields Bruckhaus Deringer

White & Case

Glencore

Estudio Grau Abogados

Linklaters

Bank

Clifford Chance

Miranda & Amado Abogados

This transaction was the largest overseas China mining acquisition to date, said Linklaters. The sheer size of the deal makes it a winner. Glencore sold its entire interest in the Las Bambas copper mine project to a consortium of Chinese bidders comprising MMG (62.5%), Guoxin International (22.5%) and CITIC (15%).

According to Linklaters, closing the transaction was subject to certain regulatory approvals, including from MOFCOM and Peru’s Prolnversion, as well as the approval of MMG shareholders. The transaction closed in Hong Kong and was conducted pursuant to remedy commitments entered into with MOFCOM. White & Case advised MMG on the consortium shareholder arrangements, and the consortium on the M&A, HKEx approvals, and financing and acquisition through a combination of equity and long-term debt facilities from a banking syndicate arranged by China Development Bank. Clifford Chance advised the syndicate of Chinese banks in respect of the US$7 billion financing for the acquisition, development and construction of the Las Bambas project.

Nanjing Cenbest acquires 89% stock in House of Fraser (US$250 million)

Parties

Legal counsel

Nanjing Cenbest

Clyde & Co

Simpson Thacher & Bartlett

Zhong Lun Law Firm

House of Fraser

Linklaters

On conclusion of this deal, Yuan Yafei, chairman of Sanpower Group, the largest shareholder of Nanjiing Cenbest, was quoted as saying it was “the largest cross-border direct acquisition by a Chinese non-state-owned A-share listed company, and the largest overseas acquisition in the retail sector by a Chinese business”.

The transaction constituted a major asset restructuring of Nanjing Cenbest, involving dozens of shareholders in several European countries. Despite multinational legal procedures, domestic and foreign disclosure requirements, the transaction was delivered within four months of both parties signing the agreement. The takeover involved many professional intermediaries who submitted views on various issues from countries involved to the CSRC for approval.

Zhong Lun Law Firm examined the foreign due diligence data independently, and liaised with more than 30 transaction parties in Europe and the UK to fulfil needs of the deal and satisfy the requirements of Chinese authorities.

Phoenix Media acquires PIL’s children’s book business (US$80 million)

Parties

Legal counsel

Jiangsu Phoenix Education Publishing

O’Melveny & Myers

Publication International (PIL)

Much Shelist

This deal is something of a media breakthrough. According to O’Melveny & Myers, the transaction is the first overseas acquisition by a Chinese company in the media and publishing industry. Jiangsu Phoenix Education Publishing purchased assets relating to the children’s book business from Publication International (PIL) and PIL’s subsidiaries in the US, Australia and Spain, as well as shares of PIL’s subsidiaries in Germany, France and Mexico, for US$80 million. O’Melveny helped Phoenix set up a holding company in the Shanghai free trade zone (FTZ) to benefit from new policies that simplify approvals for Chinese companies investing abroad.

The holding company set up a subsidiary in the US, which acquired all assets of PIL and PIL’s affiliate there, and a subsidiary in Hong Kong, which acquired PIL’s assets in the UK, Australia, Germany, France and Mexico. The firm worked with local counsel and steered Phoenix through the regulatory hurdles and approval and filing processes in these countries. The takeover also required domestic approval from the administrative committee of the Shanghai FTZ and the State Administration of Foreign Exchange (SAFE).

Yue Xiu Enterprises’ takeover of Chong Hing Bank (US$1.5 billion)

Parties

Legal counsel

Yue Xiu Enterprises (Holdings)

Baker & McKenzie

Liu Chong Hing Investment (LCHI)

Chong Hing Bank (CHB)

Deacons

Slaughter and May

The acquisition was the first major takeover of a financial institution in Hong Kong by a non-financial institution acquirer, and the first takeover of a bank in Hong Kong since the publication of the new guidelines on minimum criteria for authorisation issued by the Hong Kong Monetary Authority (HKMA) in October 2013, noted Slaughter and May.

Slaughter and May advised LCHI, and its subsidiary, CHB, a Hong Kong-based commercial bank, on a voluntary cash partial offer to be made by Yue Xiu Enterprises (Holdings), advised by Baker & McKenzie, for up to 75% of the shares in CHB. Baker & McKenzie said this was the first time a partial offer was proposed to be used by a party that did not have any interest in the target, and for a partial offer to have a minimum and maximum level of acceptance. Slaughter and May also commented that the transaction was one of the few public takeovers in Hong Kong to date with a reciprocal break fee arrangement.

Zhenfa Energy Group acquires majority stake in STR Holdings (US$21.7 million)

Parties

Legal counsel

Zhenfa Energy Group

Polsinelli

STR Holdings

Brown Rudnick

Martin Hu & Partners

The transaction is the first where a Chinese private entity acquired the controlling interest of an NYSE-listed and actively traded company in the world’s largest stock exchange, noted Martin Hu & Partners (MHP). Given the political sensitivities of Chinese companies seeking a foothold in the US, the deal takes on special significance.

STR Holdings, a global new energy company, agreed to sell 51% of its equity to China solar photovoltaic power station developer Zhenfa Energy Group for US$21.7 million. MHP said that in addition to the usual M&A concerns, the transaction involved significant Sino-US cross-border issues such as NDRC approval for outbound investment, SAFE regulations, CFIUS regulatory approval, NYSE public disclosure and corporate governance rules that all made negotiating the structure and agreement for the deal more complicated.


Joint venture

Greenland’s joint venture with Forest City (value: N/A)

Parties

Legal counsel

Greenland Holdings

DLA Piper

Forest City Ratner

Goodwin Procter

This JV was one of the largest outbound investment transactions in 2013, and was the largest commercial real estate development in the US to get direct backing from a Chinese company, according to DLA Piper, which acted for China’s Greenland Holdings in the purchase of a stake in the Brooklyn Atlantic Yards project.

The state-owned property developer signed an MoU with Forest City Ratner, which gave the company a 70% stake in the 15-tower apartment project in New York, which also included office and retail space. The Atlantic Yards site also includes the Barclays Centre arena.

This was the first transaction for Greenland in New York and DLA assisted the company in navigating the complex legal, commercial and political issues involved in the project. DLA Piper’s Shanghai office described the deal as interesting, challenging and ground breaking, adding it demonstrated an increase in cross-border deal flow originating in China.

Johnson Controls’ joint venture with Yanfeng Automotive Trim Systems (US$7.5 billion)

Parties

Legal counsel

Johnson Controls

Cooley

Yanfeng Automotive Trim Systems

Linklaters

Formation of the joint venture (JV) will create the world’s largest supplier of automotive interiors with sales of approximately US$7.5 billion, Linklaters commented.

The JV will also be the largest manufacturing entity located in the Shanghai FTZ, with global engineering, development and customer centres in the US, Europe, China, Japan and India, Linklaters added. According to Cooley, the deal set the trend for further industry consolidations, entailing equity swaps involving offshore entities, which had never been done in the past. It was structured as a non-cash transaction where each party contributes assets and equities into the venture.

Also, the deal represented a major step by Huayu Automotive Systems, Yanfeng’s parent, to implement its globalisation strategy in connection with a new round of restructuring of China’s state-owned business, Cooley said. Yanfeng will hold a 70% stake of the JV, and Johnson Controls will own 30%.

KME Group’s joint venture with Golden Dragon (US$200 million)

Parties

Legal counsel

KME Group

Gide Loyrette Nouel

P+P Pöllath + Partners

This transaction is unique as it combined two major copper processors – KME Group from Germany and Golden Dragon from China – under a JV that would control plants across China and Europe, said Gide Loyrette Nouel, making the arrangements and procedures quite complex.

The JV transaction involved multi-jurisdictional merger control checks, contribution of European assets to a Hong Kong entity, outbound investment approval for Golden Dragon to invest in the Hong Kong company, advanced intellectual property (IP) arrangements as well as a sophisticated governance structure to give the Hong Kong JV effective control of its European plant and construction of its Chinese facility.

KME contributed a German plant, located in Stolberg, to the JV. The JV will also construct a new production plant in Xinxiang, Henan, valued at around US$100 million. The target of the JV is to become a key global player in the “connector” segment, and to be the only player to have fully integrated manufacturing operations in China able to supply directly for all major markets worldwide.


Take private

Giant Interactive’s take private transaction (US$3 billion)

Parties

Legal counsel

Giant Interactive Group

Conyers Dill & Pearman

Grandall Law Firm

Maples and Calder

O’Melveny & Myers

The consortium of buyers:

Baring Asia Private Equity Fund

Hony Capital

CDH Investments

Giant Interactive’s chairman Shi Yuzhu

Fangda Partners

Kirkland & Ellis

Skadden Arps Slate Meagher & Flom

Walkers

Weil Gotshal & Manges

Wilson Sonsini Goodrich & Rosati

The special committee of Giant Interactive

Akin Gump Strauss Hauer & Feld

Fenwick & West

Maples and Calder

The bank consortium (lenders)

Appleby

Jun He

Linklaters

Shearman & Sterling

This transaction was widely reported to be the second-largest private equity-backed take-private of a US-listed Chinese company.

The agreement with a consortium of buyers represented a transaction value of US$3 billion for online gaming operator and developer Giant Interactive Group.

According to O’Melveny & Myers, the transaction was financed through a combination of Giant’s cash reserves, equity contributions from the buyers, and the proceeds from a committed and underwritten loan facility from 15 international and Chinese lenders for US$850 million.

The privatisation, which proceeded by way of a merger in the Cayman Islands, involved Giant Interactive merging with Giant Merger Limited, which acted as the buying vehicle, Appleby noted.

Wilson Sonsini Goodrich & Rosati added that Giant founder Shi Yuzhu sold a significant portion of his holdings to the private equity sponsors during the transaction, which is the first go-private involving a US-listed Chinese company that used this “partial exit and partial roll-over” model.

Giant used a variable interest entity (VIE) structure to go public in the US, and also adopted a creative restructuring process to simplify the shareholding structure of the VIE.


Debt capital market

Air China’s secured notes (US$385 million)

Parties

Legal counsel

Air China

Sandalwood 2013

Baker & McKenzie

Run Ming Law Office

Underwriters

Clifford Chance

King & Wood Mallesons

Morris James

Ray Quinney & Nebeker

Vedder Price

This transaction featured a flip-to-capital markets option in which the proceeds from the offering were used to refinance a US Export-Import Bank loan used to purchase two new Boeing 777-300ER aircraft and three new Boeing 737-800 aircraft, according to Baker & McKenzie.

The firm advised Air China, as the lessee, and Sandalwood 2013, a special purpose trust incorporated in the state of Delaware, on the respective offerings of: US$130 million in 2.836% secured notes due 2025 and US$132 million in 2.897% secured notes due 2025, both guaranteed by the US Ex-Im Bank; and a US$123.65 million offering of 2.821 % secured notes due 2026, guaranteed by the US Ex-Im Bank.

Baidu’s notes offering on NASDAQ: (US$1 billion)

Parties

Legal counsel

Baidu

Han Kun Law Offices

Li & Partners

Maples and Calder

Skadden Arps Slate Meagher & Flom

Joint bookrunners and joint lead managers

Davis Polk & Wardwell

Underwriter

Jingtian & Gongcheng

This deal enabled a PRC-based enterprise to raise offshore funding for its operations in the PRC through a notes issuance, according to Li & Partners.

Baidu is also one of the few significant Chinese tech companies to tap the US dollar bond market, Maples and Calder noted.

Baidu, a leading Chinese-language internet search provider, completed the offering of the US$1 billion aggregate principal amount of 2.75% notes due 2019. The notes are expected to be listed on the Singapore Stock Exchange.

The offering strengthened the tech company’s balance sheet in the face of stiff competition from rivals Tencent and Alibaba.

CNOOC’s SEC-registered guaranteed notes offerings (US$4 billion)

Parties

Legal counsel

CNOOC

CNOOC Nexen Finance

Blake Cassels & Graydon

Davis Polk & Wardwell

Stewart McKelvey

Underwriters

Jun He Law Offices

Linklaters

Trustee

Mayer Brown JSM

According to Davis Polk & Wardwell, this deal ranked as the second-largest global debt offering from non-Japan Asia in the past decade, as well as the largest debt offering from non-Japan Asia registered with the US Securities and Exchange Commission (SEC), involving complex co-ordination with cross-border stock exchanges in various jurisdictions.

CNOOC Nexen Finance, a wholly owned subsidiary of CNOOC, completed its SEC-registered offering of guaranteed notes in a deal that required co-ordination with HKEx, NYSE, SEC and Toronto Stock Exchange filing and regulatory obligations. CNOOC sought efficient term financing structured to address Canadian and international tax issues. Davis Polk’s innovative structure created disclosure, securities law compliance and cleared system process issues that needed to be worked out on an aggressive timetable for securities that were being registered for public offer in the US with the SEC.

CNOOC is to date the only company to successfully list its debt securities in Hong Kong under the streamlined process for private placements to professional investors under the Listing Rules, while simultaneously offering the securities publicly in the US under a registration statement filed with the SEC, Davis Polk said.

Greenland’s bond offering (US$1 billion)

Parties

Legal counsel

Greenland Global Investment

AllBright Law Offices

Davis Polk

Maples and Calder

Joint global coordinators, joint bookrunners and joint lead managers

Commerce & Finance Law Offices

Linklaters

This transaction was the first bond deal using the cross-border guarantee structure after the PRC cross-border guarantee regulations became effective, said Davis Polk. The deal was also completed in one month, which made it special.

Greenland Global Investment, a subsidiary of Greenland Holding Group, completed its Regulation S offering of US$400 million in 4.375% bonds due 2019 and US$600 million in 5.875% bonds due 2024. Davis Polk said under the old rules, Greenland as a property developer was not eligible to provide guarantees. Only SOEs were eligible to provide guarantees, and they needed to receive a pre-approved quota from the NDRC.

According to the firm, the new regime has generally lifted the industry restrictions as well as the SAFE approval requirement. Deal counsel needed to address uncertainties about the new SAFE registration process, and in this respect all aspects of the deal were new and precedent-setting.

Guangzhou R&F Properties’ high-yield bonds (US$1 billion)

Parties

Legal counsel

Guangzhou R&F Properties

Sidley Austin

Conyers Dill & Pearman

King & Wood Mallesons

Stamford Law Corporation

Joint lead managers/joint bookrunners

Linklaters

Jun He Law Offices

Linklaters said this transaction was one of the largest high-yield deals in Asia. It was also one of the few billion-dollar issues for PRC real estate high-yield deals in Asia in the year, according to Sidley Austin. Guangzhou R&F Properties, a leading PRC property developer, guaranteed its offering of US$1 billion in 8.5% senior notes due 2019 by Trillion Chance, including “high-yield” covenants and pursuant to Regulation S.

Sidley Austin said the notes were issued through this special purpose vehicle set up by Guangzhou R&F in BVI, guaranteed by certain other offshore subsidiaries of Guangzhou R&F and secured by shares of capital stock of these offshore subsidiaries and an interest reserve account. Unlike most other PRC real estate high-yield deals, the parent holding company is an onshore entity. As such, the deal was structured differently – Guangzhou R&F entered into a keepwell deed and an equity interest purchase undertaken in connection with the notes offering as credit enhancements. The transaction involved complex legal documentation in multiple jurisdictions (PRC, HK, Cayman Islands, BVI and Malaysia), executed within a tight timetable, Sidley Austin added.

Inaugural RMB Formosa bond issues (US$1 billion)

Parties

Legal counsel

China Construction Bank

Allen & Overy

Lee & Li

Linklaters

Agricultural Bank of China

Freshfields Bruckhaus Deringer

Haiwen & Partners

Lee & Li

Linklaters

Bank of Communications

Freshfields Bruckhaus Deringer

Haiwen & Partners

Lee & Li

Linklaters

Bank of China

Clifford Chance

Jingtian & Gongcheng

JunZeJun

Linklaters

The deal represented the start of a new bond market for Taiwan, and set the precedent for the other PRC banks that are also eligible to issue Formosa bonds under the new regulations, according to Linklaters.

The firm advised on the first RMB securities offering by PRC issuers in Taiwan since 1949.

The firm advised on the inaugural RMB Formosa bond issues of the Hong Kong branches of Bank of Communications, Agricultural Bank of China, Bank of China, and China Construction Bank. The four issues were listed on the GreTai OTC Market in Taipei on 10 December 2013 and completed within two weeks. The offerings took advantage of new regulations in Taiwan that became effective on 27 November 2013. The Linklaters team worked out the new rules, established two new medium-term note programmes, completed a standalone deal for a debut issuer and closed four deals on the same day.

The transaction was particularly important in establishing Taiwan’s offshore yuan-denominated bond market, Linklaters said, and was a significant step for PRC issuers to tap into the Taiwanese market with its RMB bond products.

Qihoo 360 Technology’s offering (US$900 million)

Parties

Legal counsel

Qihoo 360 Technology

Commerce & Finance Law Offices

Kirkland & Ellis

Underwriters

Lenders

King & Wood Mallesons

Latham & Watkins

This was the largest convertible bond issued by a US-listed Chinese technology company to date and the largest convertible bond in Asia in the past three years, according to Kirkland & Ellis. Qihoo 360 Technology is one of the fastest-growing internet companies in China and is also listed on the NYSE.

Qihoo 360 Technology completed its offering of US$900 million of convertible senior notes, consisting of a private placement of US$450 million in convertible senior notes due 2020 and US$450 million in convertible senior notes due 2021, with a 30-day overallotment option to buy an additional US$135 million of the notes, the firm said.

The convertible senior notes were offered pursuant to Rule 144A and Regulation S.

Trina Solar’s convertible senior notes (US$150 million)

Parties

Legal counsel

Trina Solar

Fangda Partners

Kirkland & Ellis

Underwriters

Jun He Law Offices

Simpson Thacher & Bartlett

This transaction provided a significant example of a leading Chinese photovoltaic company that boosted development of its products and invested in power generating projects after China put forward supporting polices for the industry, according to Jun He. Trina Solar, a manufacturer specialising in crystalline-silicon photovoltaic modules and products, issued convertible preferred shares worth US$150 million that will be expire in 2019 with a 3.5% coupon rate.

Jun He said this transaction involved creative factors in conducting research on the track records of Trina Solars new subsidiaries and restructured companies, performing in-depth analysis that focused on the compliance of its restructuring and investment matters, and comparing and examining financial documents such as the significant operation contracts and loan guarantees within Trina Solar’s structure.


Overseas equity capital market

Alibaba Group’s NYSE IPO (US$25 billion)

Parties

Legal counsel

Alibaba Group Holding

Fangda Partners

Maples and Calder

Simpson Thacher & Bartlett

Yahoo! Inc

Silver Lake Partners

DST Global

Conyers Dill & Pearman

Goodwin Procter

Skadden Arps Slate Meagher & Flom

Underwriters:

Credit Suisse Securities (USA)

Deutsche Bank Securities

Goldman Sachs (Asia)

JP Morgan Securities

Morgan Stanley & Co International

Citigroup Global Markets

King & Wood Mallesons

Sullivan & Cromwell

This quite simply was the largest IPO in global financial history. Goodwin Procter said the deal broke new records for a Chinese company listing its shares in any stock market.

The IPO of Alibaba Group Holding, the largest online and mobile commerce company in the world in terms of gross merchandise volume in 2013, comprised more than 320 million American depository shares (excluding green shoe option to sell more). The transaction included a secondary component, with Yahoo! Inc as the principal selling shareholder along with other founders, management, employees and private equity investors. After the listing, Alibaba’s share value has rocketed following a positive response from the market.

According to Simpson Thacher, aside from the sheer size of the transaction, this was an exceptionally complex deal with numerous innovative features and transaction challenges including: partnership structure and corporate governance arrangements; complex secondary component with a large number of sellers involved; active involvement of and negotiation with major non-executive shareholders; heightened US regulatory scrutiny and complex SEC observations; active M&A activity throughout the IPO process; heightened media scrutiny; and multiple joint bookrunners with complicated deal dynamic.

Bank of China’s offshore issuance and HK IPO (US$6.5 billion)

Parties

Legal counsel

Bank of China

King & Wood Mallesons

Linklaters

Underwriters

Clifford Chance

Jingtian & Gongcheng

According to Linklaters, this transaction was the first Basel III compliant Additional Tier 1 (AT1) capital issuance by a PRC bank, the first preference share issuance by a PRC company, the largest international regulatory capital issuance by a PRC bank, the largest AT1 issue in the world after the implementation of Basel III, and the largest fixed income issuance under Regulation S only.

Bank of China became the first domestic listed company to successfully issue offshore preference shares on 15 October 2014, and the firm said this was of great significance in marking initial results achieved in the pilot work of Chinese preference shares.

Since the promulgation of the Guiding Opinions of the State Council on Pilot Programme of Preferred Shares and Administrative Measures for the Pilot Programme of Preferred Shares, King & Wood Mallesons added that many domestic listed companies have published issuance plans of preference shares, making this successful pilot issuance all the more significant.

China Cinda’s IPO on HKEx (US$2.8 billion)

Parties

Legal counsel

China Cinda Asset Management

Davis Polk & Wardwell

Haiwen & Partners

Underwriters

Freshfields Bruckhaus Deringer

King & Wood Mallesons

This was one of the most significant IPOs in Hong Kong in 2013, according to Davis Polk & Wardwell. The inclusion of a calculated value report in an IPO prospectus was unprecedented. Being the first state-owned Chinese asset management company to list in Hong Kong, there were several issues which arose and were highlighted as part of this offering.

China Cinda Asset Management, one of China’s four state-owned bad-loan/debt managers and the first to go public, floated the US$2.8 billion IPO as well as an international offering under Rule 144A and Regulation S, Davis Polk noted. Precedent-setting work included an independent calculated value report, necessary because a significant part of the group’s available for sale equity investments were unlisted. The firm successfully argued, under the HKEx Listing Rules, for waivers from disclosure on numerous distressed asset acquisitions, including from the Ministry of Finance. Davis Polk resolved complex regulatory issues specific to the company’s business and managed obstacles of new regulation across jurisdictions to ensure the offering and listing’s success.

China Everbright Bank’s HK IPO (US$3.5 billion)

Parties

Legal counsel

China Everbright Bank

Freshfields Bruckhaus Deringer

King & Wood Mallesons

Li & Partners

Underwriters

Davis Polk & Wardwell

Jingtian & Gongcheng

This complex deal involved a $3.5 billion IPO and listing on the HKEx and an international offering under Rule 144A/Regulation S of China Everbright Bank. Completed late in 2013, it was the largest IPO in Hong Kong and the largest IPO of a PRC company that year.

According to Davis Polk, it was the first Hong Kong IPO to be allowed to exercise an offer size adjustment option of 15% in relation to newly issued shares, to increase flexibility in the offering structure and meet additional market demand. The firm said the IPO was also the first to obtain consent from the HKEx to place cornerstone shares to a qualified domestic institutional investor (QDII) manager that was a connected client of a bookrunner involved in the global offering.

China Vanke’s B-share to H-share listing (US$2.1 billion)

Parties

Legal counsel

China Vanke

Paul Hastings

Shu Jin Law Firm

CITIC Securities Corporate Finance (HK)

Clifford Chance

Global Law Office

According to Shu Jin Law Firm, this was the first time that a Chinese listed real estate company has successfully listed and traded its B shares on the HKEx by way of introduction, and also the third successful B-shares to-H shares conversion following CIMC and Livzon Pharmaceuticals. The B-to-H listing not only has practical significance for the reform in China’s B-share market, but also offers constructive ideas for other B-stock listed real estate companies in China.

China Vanke converted its B-shares with a total market value of approximately US$2.1 billion into H-shares, and accomplished its listing on the main board of HKEx by way of introduction. Paul Hastings said the B-to-H deal was challenging because of the complex PRC regulatory issues involved and various special waivers needed to be applied to the HKEx. Shu Jin added the deal involved numerous companies and real estate projects that needed to be audited.

CITIC Group’s HK IPO (US$37 billion)

Parties

Legal counsel

CITIC Pacific

Freshfields Bruckhaus Deringer

Jia Yuan Law Offices

This was the biggest acquisition in the global market in 2014, and the first transaction for an SOE to achieve an overall restructuring and listing through existing offshore listing platforms, according to Jia Yuan Law Offices. The transaction was “a significant step of CITIC Group’s reform in ‘mixed ownership’ and internationalisation, and was marked as transformation of super-giant state-owned enterprises”.

Since 1 September 2014, CITIC Pacific, injected with 100% equity from CITIC Group Corporation, has been listed and traded by the name of CITIC Limited on the HKEx. This involved a transaction amount of about HK$286.5 billion (US$37 billion), which included HK$233.2 billion in shares and HK$53.3 billion in cash. “The deal is projected to be the biggest transaction on both mainland China and Hong Kong in 2014,” Jia Yuan said. The transaction covered laws in many fields connected with CITIC Group and its 2,000 subsidiaries in jurisdictions including the PRC and Hong Kong, and a dozen belonging to foreign listed companies.

JD.com Inc’s IPO on NASDAQ (US$2.05 billion)

Parties

Legal counsel

JD.com Inc

Maples and Calder

Skadden Arps Slate Meagher & Flom

Zhong Lun Law Firm

DST Global and Hillhouse Capital (Sellers)

Goodwin Procter

Underwriters

Commerce & Finance Law Offices

Davis Polk & Wardwell

Depositary (Deutsche Bank, Hong Kong Branch)

White & Case

This transaction was the largest IPO for a China-based company in the US at the time, and is now the second-largest after Alibaba. Goodwin Procter and Davis Polk said the IPOs value, the company’s unique business model, large group of sophisticated shareholders, and complex processes and co-operation made this listing significant.

As Zhong Lun noted, JD was also the first China-based company that made its first filing to the SEC as a public filing, instead of a confidential filing, because of the sheer size of the company. The firm said the unique nature of JD.com’s business model meant there were no easy comparisons, so the firm spent a lot of time understanding the model and preparing for disclosure. There was also a complicated business co-operation with Tencent to deal with during the IPO process that involved disclosure, pro forma and corporate structure issues. A large group of sophisticated shareholders, each of whom had engaged their own counsel for negotiation, required surefooted work from Davis Polk, as underwriters’ counsel, in securing lock-up agreements.

Jinmao’s HK IPO (US$414 million)

Parties

Legal counsel

Franshion Properties (China)

Jinmao Investments Jinmao (China) Investments Holdings

Freshfields Bruckhaus Deringer

Tian Yuan Law Firm

Underwriters

Mayer Brown JSM

Jun He Law Offices

This IPO was the first time that a Chinese company has completed a spin-off listing in the form of a listed trust on the HKEx, according to Tian Yuan Law Firm. As Jinmao Investments and Jinmao (China) Investments Holdings’ controlling shareholder, Franshion Properties spun off and separated the listing of the group’s hotel business by way of a business trust. Considering that part of Jinmao’s retained business overlapped with that of its parent company, Tian Yuan said it assisted in presenting supervising authorities with the necessity of retaining part of the overlapped business, and established a mechanism to avoid competition.

Because the spin-off listing also involved complex asset divestiture and restructuring, the firm also assisted the companies in analysing their plans for divestiture and restructuring, and choosing an optimal plan after considering time, process, tax and the supervision requirements for state-owned assets.

WH Group’s HK IPO (US$2.36 billion)

Parties

Legal counsel

WH Group

Commerce & Finance Law Offices

Maples and Calder

Paul Hastings

Underwriters

Cleary Gottlieb Steen & Hamilton

Haiwen & Partners

Jingtian & Gongcheng

Maples and Calder said this was the second-largest IPO and listing on HKEx in 2014. Cleary noted that completing this IPO less than a year after the groups US$7.1 billion Smithfield Foods acquisition was also a feat for the legal teams involved in cross-border diligence, as well as posing regulatory and operational challenges.

WH Group completed its IPO and listing for a total value of US$2.36 billion on the HKEx. The successful relaunch arrangement was unusual in that it was brought to market at a fixed price rather than the more common structure of a price range. Paul Hastings noted that one of the practical challenges encountered during the transaction was co-ordination among the large number of investment banks, a problem not visible in the July re-launch process. The firm said the deal significantly underscored a new trend for Chinese companies to list and invest overseas.


Domestic equity capital market

China TransInfo’s delisting and return to A-share market
(US$460 million)

Parties

Legal counsel

China TransInfo Technology Corporation (formerly known as Beijing Surekam Corporation)

Tian Yuan Law Firm

Acquirers

Jingtian & Gongcheng

This transaction was one of the earliest examples of a red-chip company delisting and returning to the A-share market through a backdoor listing. The case was of practical significance for other NASDAQ-listed Chinese enterprises intending to return home, said Tian Yuan Law Firm.

Tian Yuan was tasked with assisting in the CSRC-approved asset restructuring of Beijing Surekam (now known as China TransInfo). The company was injected with 100% equity of China TransInfo Technology Corporation, 30.24% equity of UNIS and 48.98% equity of Beijing PalmCity Technology for a consideration of RMB2.82 billion (US$460 million) through asset swap and share issuance asset acquisition. This project was approved by the CSRC on 6 May 2014.

Through the reverse takeover of a company incorporated in the US state of Delaware, a China TransInfo subsidiary, China TransInfo Technology Group, became listed and traded in the over the counter bulletin board of the US, and in 2008 transferred to NASDAQ. The company became the first Chinese hi-tech company in the transportation information industry to be listed on NASDAQ. In 2012, China TransInfo Technology Group delisted from the NASDAQ by repurchasing shares from public shareholders.

Ford Auto China’s loan securitisation (US$130 million)

Parties

Legal counsel

Ford Automotive Finance (China)

Katten Muchin Rosenman

Zhong Lun Law Firm

This was the first securitisation transaction originated by a wholly foreign owned company in China and the first retail auto mortgage loan securitisation transaction under the third round credit assets securitisation pilot programme, according to Katten Muchin Rosenman. Zhong Lun and Katten advised Ford Automotive Finance (China), a wholly owned subsidiary of Ford Motor Credit Company, one of the largest automotive finance companies in the world, in its first retail auto mortgage loan securitisation deal in China.

The transaction structure and documentation were designed to align with Ford Credit’s securitisation platforms in the US and Europe as much as allowable under PRC laws, noted Katten. Katten teamed up with PRC counsel Zhong Lun to maximise the US-style structure and documentation under the PRC regulatory environment. Unlike most securitisation deals in the interbank market of the PRC, which seek off-balance-sheet treatment of assets by securitisation, this deal seeks on-balance-sheet treatment, according to Zhong Lun.

Several innovations were made against customary practice in the PRC securitisation market, including the “full turbo” feature of the paydown structure, overcollateralisation as credit enhancement, and the customised convening and voting procedure of noteholders’ meeting and loans servicing procedure.

GF Securities’ Hengjin No. 1 financial lease asset securitisation (US$101 million)

Parties

Legal counsel

GF Securities

Zhong Lun Law Firm

The innovative transaction provided a good illustration of the regulatory and legal system, and resulted in the first innovative financial leasing pooled product to list on the Shenzhen Stock Exchange, thus increasing the liquidity of private offered products, said Zhong Lun Law Firm.

The GF Hengjin No. 1 financial leasing asset securitisation product adopted a dual special purpose vehicle (SPV) transaction structure.

GF Securities set up a pooled asset management plan and then through a fund subsidiary established a preferred/common specific asset management plan, of which the preferred units were subscribed by GF Hengjin No. 1, for RMB533 million (US$86 million), and the common units were held by a large domestic financing leasing company, for RMB94 million. Finally, the fund subsidiary issued preferred offering units to raise funds and purchased the three-year income rights of the specific leasing property of the financing leasing company.

Zhong Lun said the transaction illustrated the securitisation techniques of traditional assets, which include the selection of basic assets, the establishment of SPVs, the separation and reorganisation of cash flows, the classification of products, the handling of reserve accounts and prepayment, the employment of cash flow paths and surplus cash, the internal and external credit-enhanced measures and others.


Private equity and venture capital

Domain Elite’s investment in SMART Medical Systems and Medico (Value: N/A)

Parties

Legal counsel

Domain Elite

Meitar Liquornik Geva Leshem Tal

Orrick Herrington & Sutcliffe

Domain Associates

Reed Smith

SMART Medical Systems

Medico (Hong Kong)

Yigal Arnon & Co

This deal involved a tricky two-pronged investment in a cutting-edge field – one into an Israeli company, and another into its Hong Kong subsidiary – made by an entity that was formed as co-operation between a US venture capital fund and a China-based investor, noted Orrick Herrington & Sutcliffe.

Orrick explained that legally there were two investments into two entities using two sets of governing laws, but commercially it was one investment. The theme in this investment was how Domain Elite would work with SMART Medical Systems and Medico to have their technologies and products licensed for distribution in China.

The investment structure and the documents had to account for multiple exit possibilities – an IPO in the US, or in Hong Kong, or a trade sale to a multinational or a Chinese company – in multiple jurisdictions, and that created much complexity in the design and execution of the deal.

Establishment of East-West-North Guangdong Revitalisation Fund (US$1.96 billion)

Parties

Legal counsel

PICC Capital Investment Management

Beijing DOCVIT Law Firm

Guangdong province Department of Finance

King & Wood Mallesons

China Construction Bank

AllBright Law Offices

The deal was the first equity fund set up jointly by provincial platforms and financial SOEs. The fund has become a flagship for the financing of local authorities against the backdrop of intensifying investment and financing system reforms, according to AllBright.

AllBright noted that a classified private equity fund of this size faced potential transaction obstacles involving the policies of insurance and banking funds, and the supervision policies of state-owned assets.

The law firm designed an innovative transaction plan to secure approvals from relevant authorities, and cleared all obstacles in negotiations to guarantee the interests and securities for China Construction Bank in a difficult situation where the bank acted as a intermediary partner between the common investors and preferred investors in the process.

Harvest Yuanhe Direct Investment’s closed-end fund (US$1.62 billion)

Parties

Legal counsel

Harvest Fund Management

Llinks Law Offices

This fund invested in a Sinopec subsidiary by raising money from retail investors, and Llinks said it was a great example of how retail investors can participate in the reform of diversified ownership.

Llinks added that it issued a legal opinion regarding the qualifications of parties involved in this fund, as well as criteria that the fund meets, based on the firm’s due diligence. The firm said the legal opinion was submitted to the CRSC and is a reference document for all investors to the fund.

Harvest Fund Management launched the retail fund in the unlisted equity of a Sinopec subsidiary, which is a part of reform of diversified ownership of Sinopec.

This fund is closed-ended, and Harvest invested a certain amount out of its pocket as seed funding. Llinks said this retail fund was approved by the CSRC as a pilot, and it invested in a single equity in accordance with the fund contract, which is a breakthrough in the investment scope of a retail fund.

Sinopec Marketing’s mixed ownership investment (US$17.3 billion)

Parties

Legal counsel

Sinopec Marketing

Haiwen & Partners

China Life Insurance Company Fosun Group

Other investors

AllBright Law Offices

The change in ownership of Sinopec Marketing is regarded as a flagship example for a new wave of “mixed ownership” reforms of SOEs, said AllBright.

With its private financing valued at more than RMB100 billion (US$16.3 billion), it also was seen as the biggest domestic financing transaction. Sinopec Marketing signed a capital increase agreement with 25 domestic and foreign investors to subscribe for a 29.99% equity interest in the company with RMB107 billion.

AllBright represented several investors including China Life Insurance Company (China Life) and Fosun Group. The investment of China Life amounted to RMB10 billion, while Fosun established a company called Pingtao (Hong Kong) to invest RMB2.15 billion. This transaction featured a complex step-by-step bidding process in a tight timeframe. It took one month to complete the bidding and the transaction after shortlisted investors were confirmed and due diligence was started.

TutorGroup’s subscription of Series B preferred equity (US$80 million)

Parties

Legal counsel

TutorGroup Holding

Cadwalader Wickersham & Taft

Han Kun Law Offices

Meriholl Law Firm

Travers Thorp Alberga

Alibaba

Sheppard Mullin Richter & Hampton

Temasek Holdings (Private)

Baker & McKenzie

Davis Polk & Wardwell,

Fangda Partners

Walkers

Qiming Venture Partners

O’Melveny & Myers

According to Cadwalader Wickersham & Taft, this transaction overcame a number of complicated challenges, as foreign investment operating any type of online platform in China is heavily restricted, and a tremendous amount of unique structuring is needed for a foreign business to operate successfully. Being an educational platform added to the scrutiny, and the firm said this deal involved layers of restriction complexities, shifting ambiguities of law, and compliance issues, not to mention that by receiving a round of financing from well-known foreign investors, high standards of legal compliance over their portfolios was required.

During the transaction, structural and legal issues involved in operating an online educational platform in China, and other jurisdictions such as Hong Kong, Taiwan and the US, were also addressed. Recent changes in some Chinese law and industry policy on non-governmental funded education endeavours raised significant compliance concerns.

Vision Knight Capital closes second private equity fund (US$550 million)

Parties

Legal counsel

Vision Knight Capital

Kirkland & Ellis

Mourant Ozannes

Speed was king for this transaction. Kirkland said the fundraising was completed in less than three months, making it one of the fastest fundraisings ever accomplished in Asia. The deal also involved complex procedures among some major investors.

Vision Knight Capital, a leading independent Chinese private equity firm, closed its second private equity fund, Vision Knight Capital China Fund II, with aggregate capital commitments of US$550 million. The fund, according to Kirkland, accepted commitments from a broad mix of global institutional investors including sovereign wealth funds, pension plans, endowments and foundations, diversified financial institutions and family offices.


Intellectual property

John Deere’s colour combination trademark infringement (US$74,000)

Parties

Legal counsel

John Deere

King & Wood Mallesons

This was the first lawsuit in China involving infringement of a colour combination trademark since the category came under the protection of the Trademark Law in 2001, according to King & Wood.

John Deere is a well known US agricultural machinery manufacturing enterprise, and the colour combination of a green body and yellow wheels is not simply a symbol of John Deere tractors, it is a trademark of the company. King & Wood said John Deere’s China division won its case when the court found its competitor violated John Deere’s rights to a green and yellow combination on heavy equipment. The court verdict said the Qingdao and Beijing branches of Jotec International Heavy Industry must pay a total of RMB450,000 (US$74,000) in compensation.

All John Deere’s products are painted with the familiar combination of green and yellow, the firm said. The design was recognised as a trademark in 2009 in the category of agricultural equipment and dump trucks.

The trademark remains valid until 2019. But two years after its Chinese colour trademark took effect, the company found the two Jotec operations also used the colour combination on some of their harvesters and promotional materials. John Deere then filed suit asking for RMB500,000 yuan in compensation, King & Wood said.

New United in US section 337 investigation (Value: N/A)

Parties

Legal counsel

New United

Adduci Mastriani & Schaumberg

Jun He Law Offices

Fellowes

Baker & McKenzie

Prior to this case Chinese companies involved in section 337 investigations pertaining to misappropriation of trade secrets under the US Tariff Act were usually on the losing side, so the out of court settlement and withdrawal of complaint was significant and can be seen as a victory for Chinese companies, said Jun He. The complicated backdrop, and the difficulty in reaching a settlement, made the case far more complex than an ordinary trade secret or patent infringement case.

The two parties, Fellowes and New United, had a long-term co-operation until disputes occurred over a joint venture control issue, which dragged them into three years of legal proceedings with eight legal actions and over 100 litigations lodged by creditors of the former JV prior to this section 337 investigation.

In March 2013 a congressional hearing regarding disputes between Fellowes and New United made efforts to resolve these disputes through diplomatic means, Jun He added. This case also aroused serious concerns from MOFCOM and local governments in China. Jun He developed litigation strategies on behalf of New United, and defended its client in the see-saw battles which followed, while keeping good communications open between the two parties, despite several breakdowns in talks.

UK Domino trademark infringement case (Value: N/A)

Parties

Legal counsel

Domino Printing Sciences

GoldenGate Law Group

The pioneering case was a milestone, due to lack of precedents and judicial interpretations, and was probably one of the earliest IP cases that offered a relatively comprehensive explanation of several cutting-edge legal issues, according to GoldenGate.

Domino Printing is an international printing company with exclusive use rights of the trademark “Domino” all over the world (including China). Xie Ruzhou and his brother Xie Rubiao established their own company, through which they re-collected the early products of Domino Printing from end users. They sold the repackaged products after repainting them and modifying them with cheap items. In March 2012, an investigation into the case resulted in 14 people, including the brothers, being charged for passing off a registered trademark.

As the case was complex and new, the original court made two judgments in two years, which shown the court’s attention. The fact that 14 people were convicted and sentenced to imprisonment of up to three years and 11 months made it a rare IP case, noted GoldenGate. This case attracted domestic and foreign media coverage, and showed China’s determination to protect the IP of foreign undertakings.

Vodka decoding held to be infringement (value: N/A)

Parties

Legal counsel

Pernod Ricard China (Trading) Company

The Absolut Company

Wan Hui Da

This case involved trademark infringement and unfair competition, according to Wan Hui Da. In Urumqi, Absolut Vodka has been in the market for a long time. Some bottles come from parallel importers. In order to prevent tracing, importers remove the lot code off the products and stick a Chinese label printing their name as importers and retailers.

This not only affects the system of quality management of the trademark owner, but also disturbs the domestic sales of Absolut Vodka spirits and the market competition. Wan Hui Da, representing Pernod Ricard China (Trading) and the Absolut Company, filed a complaint.

“Decoded” spirits were seized and confiscated. Later, penalties were issued and infringers were fined. According to Wan Hui Da, the Intermediate Court of Suzhou recognised that importing foreign alcohol and removing the code number was an act of infringement of the trademark. Although the Suzhou Intermediate Peoples Court did not recognise that parallel importing is an act of infringement as such, the court confirmed that removing the lot code affects the function of the trademark, which is to indicate the source of the goods, and therefore infringes the rights of consumers.

Youku IP rights infringement case (US$40,000)

Parties

Legal counsel

Youku

Wintell & Co

According to Wintell & Co, this case was recognised as No. 1 among the top 10 cases announced by the National Copyright Administration of China (NCAC). The case involved complicated technological issues, negotiations and legal procedures.

Baidu Yingyin, a player application developed and operated by Baidu, facilitated public access to pirate content on websites through targeted search and hyperlinks, impaired the lawful interests of big legitimate online video providers and even threatened their survival, Wintell said.

The firm’s IP team was retained by Youku to lodge an administrative complaint to the NCAC against Baidu’s infringement of IP rights.

Wintell’s team advised copyright holders to lodge an administration complaint to protect their rights because if the holders initiated a civil litigation, the litigation would involve a lengthy process and small compensation amounts, which would not actively and fully stop the infringement acts. The team also faced challenges because administration complaints entail strict requirements on practitioners, including evidence and process control, and Baidu Yingyin involved complicated technological issues.

Wintell said, based on the firm’s work, it was clearly specified that the mode of Baidu Yingyin was an act of infringement, and Baidu was fined RMB250,000 (US$40,000) and obliged to revise its application and stop infringement. The firm said the case shows the country’s determination and authority in IP protection, while maintaining the competitiveness of the online video market.


Dispute resolution

GSKCI commercial bribery cases

Parties

Legal counsel

GlaxoSmithKline (China) Investment (GSKCI)

Jun He Law Offices

Former GSKCI chairman Mark Reilly

King & Wood Mallesons

This was the first time that a large multinational company had been charged in China for commercial bribery, involving the biggest fine amount for commercial bribery since China’s reform and opening up, with significant political, economic and diplomatic repercussions, noted Jun He and King & Wood. The intertwined cases had significant influence globally and Jun He and King & Wood believe they will act as a role model for future policy judgments in China’s pharmaceutical marketing sector.

GSKCI, a subsidiary of GlaxoSmithKline, was subject to investigation for bribery. Jun He was engaged by GSKCI, which was fined US$490 million. Jun He said this was not only the most influential case of its kind in China involving the biggest amount of money, but also had the highest number of suspected individuals and entities, the largest amount of evidence and the most complex legal relationships.

The firm assisted its client in managing risks, dealing with media and governmental matters. Consequently, the firm said, it minimised the impact on its client and helped it get through the crisis. Jun He added that this case made significant breakthroughs on entity legal issues including the evidence system structure of commercial bribery of entities, the determining of the will of entities under multi-level enterprise structure in bribery cases, and the calculation of the bribery amount under the control of entities.

Separately, Mark Reilly, the former legal representative and chairman of GSKCI, was charged by Hunan Changsha People’s Procuratorate for offering bribes to non-state staff. The ruling was made by Hunan Changsha Intermediate People’s Court in accordance with the law. King & Wood was engaged to defend Reilly. Reilly avoided jail with a suspended sentence and was deported.

Qihoo 360 v Tencent in ‘3Q War’ (US$25 million)

Parties

Legal counsel

Tencent Technology

Tian Yuan Law Firm

Tian Yuan Law Firm described this case as an “unprecedented antitrust case in China’s internet domain” for its high disputed value of US$25 million, the high profiles of litigation participants, and the extensive effect on China’s internet users of the disputed “either-or” subscription policy. The firm described the case as the most well prepared antitrust litigation in the history of China anti-monopoly law.

On 15 November 2011, Qihoo filed a lawsuit with the Superior Court of Guangdong province against Tencent and Shenzhen Tencent Computer Systems (collectively referred to as Tencent) for alleged abuse of their dominant position in the instant messaging software and service market by way of restricting transactions and tied sales. After a public trial the court dismissed the motion of Qihoo. In June 2013, Qihoo appealed the case to the Supreme People’s Court of China, which in its final judgment on 8 October 2014 upheld the trial court’s decision and dismissed the appeal.

Tian Yuan said the trial and judgment would have significant implications for the positive development of the internet industry, and for future antitrust litigation in China. Each party respectively submitted documentary evidence and relevant materials up to almost a million characters, including over 100 notary certificates and more than 10 professional authorities’ reports. The trial was broadcast via a number of satellite TV channels and internet multimedia, which reflected public attention. The final judgment was approximately 74,000 characters and praised as a “reference book judgment”.

Wuliangye’s civil compensation lawsuit (US$49 million)

Parties

Legal counsel

Wuliangye Yibin

King & Wood Mallesons

This case was China’s biggest securities civil litigation, the No. 1 case in safeguarding securities rights and the biggest A-share compensation case, said King & Wood. The firm added that, In terms of the judgment method, the case – in which the Chengdu Intermediate People’s Court sent all parties into mediation – set a new mediation model for other cases regarding false statements regarding securities.

Wuliangye Yibin was fined by the CSRC for false statements about securities disclosed by the company, and many shareholders and their lawyers immediately initiated civil compensation actions against the company. A payout of more than RMB10 billion (US$1.6 billion) was widely anticipated, although finally 7,000 shareholders claimed RMB300 million. King & Wood said its team strived to control the number of claiming shareholders and their compensation amounts, and successfully capped the total amount at RMB20 million, lower than the market predicted.

In the mediation moderated by the court, King & Wood reached a settlement of RMB13 million with 141 shareholders and the court issued a written mediation statement. The firm said that, due to lack of clarity in laws and judicial interpretations, the case involved several challenging disputable issues: the determining of the implementation date, disclosing date and the losses of shareholders among several instances of false statements; the determining criteria of a major false statement; and the determining criteria and exclusion principles of system risks.

Infrastructure

Guangdong Zhongshan-Kaiping Highway project (US$4 billion)

Parties

Legal counsel

PowerChina Road Bridge Group

Zhong Lun Law Firm

The Zhongshan-Kaiping Highway project is a major construction project in Guangdong province, and one of the biggest investment financing projects in the expressway sector, according to Zhong Lun. Local authorities raised funds by way of the build-operate-transfer (BOT) model with a 25-year concession term.

The firm, led by Wang Jihong, designed the transaction structure, drafted contracts and documents, negotiated, set up project companies and provided on-site legal services. Zhong Lun said the diversity of the contracting entities, particular standards of demolition compensation and complexities including prerequisites for starting the project brought challenges in designing the structure and terms of contracts, and in negotiations. In addition, the different arrangements of the two cities in their pricing mechanisms for demolition, the connection between the highway and the Shenzhen-Zhongshan cross-sea bridge, and the selection of dispute resolution methods and agents became the focuses in the negotiation.

The firm followed the transaction and provided opinions and advice on a case-by-case basis, assisting the client in confirming the transaction structure and negotiation strategies, and playing an important role in completing the transaction.

Long-term lease of Australian Port of Newcastle (US$1.53 billion)

Parties

Legal counsel

New South Wales Treasury

Minter Ellison

The Hastings Funds Management/China Merchants Group consortium

King & Wood Mallesons

With a financial outcome that significantly exceeded market expectations, the Port of Newcastle transaction established a benchmark in transaction preparation and execution, said Minter Ellison.

The New South Wales government awarded the 98-year lease of the Port of Newcastle – the world’s largest coal export port – to a consortium comprising Hastings Funds Management and China Merchants Group for A$1.75 billion (US$1.53 billion). Minter Ellison said it provided clear recommendations to the government about approaches to risk allocation, developed novel process and transaction documents, and advised on drafting of special legislation to facilitate not only restructure of the asset but also private sector operation during the 98-year lease.

Complex challenges that were solved in the deal included: devising a strategy to deal with coal chain stakeholders; establishing a concurrent lease structure with existing port tenants; separating the port business from other assets of the Newcastle Port Corporation being retained by the state; retaining safety/regulatory functions by the state while facilitating private sector port operation; preserving statute-based revenue streams for a private port lessee/operator; and preserving community heritage areas.

China Three Gorges’ acquisition of two hydropower projects from Energias do Brasil (US$330 million)

Parties

Legal counsel

China Three Gorges Corporation

Bonn & Schmitt

Pinheiro Neto Advogados

Tian Yuan Law Firm

One highlight of the transaction was its structure design based on tax planning, noted Tian Yuan, which assisted in laying out the structure and co-operating with parties in Brazil and Luxembourg to set up holding companies in those two jurisdictions.

The acquisition of Energias do Brasil’s two projects by China Three Gorges was successfully completed and the latter acquired a 50% interest of each project to the value of US$330 million. The firm assisted in reviewing and revising memoranda of understanding, share acquisition agreements, shareholder agreements and other transaction documents, as well as providing legal opinions concerning PRC legal issues. The investment marked a breakthrough in Chinese capital entering the Brazilian hydropower market, and opened greater bilateral co-operation between the two hydropower giants.

Sino-Mex energy investment project (US$5 billion)

Parties

Legal counsel

Xinxing Cathay International Group

Other China investors

DaHui Lawyers

Delagardelle

This energy infrastructure project in Mexico is the largest Chinese investment in Mexico, and in all of Latin America, to date, according to DaHui Lawyers. The landmark deal represented a significant milestone in the development of Chinese economic relations with Mexico and the rest of Latin America. This deal involved public and non-public investors and investment vehicles in six jurisdictions and three continents, so the structuring and government approval processes presented significant challenges.

The project was launched by Petróleos Mexicanos (Pemex), the Mexican state energy giant, and a syndicate of Chinese investors led by SOE Xinxing Cathay International Group and other Chinese investors active in Central and Latin America, including China Merchants Group. The project included offshore jack-ups and drilling platforms in the Gulf of Mexico, oil and gas pipelines throughout Mexico, LNG liquefaction plants and export ports situated on the west coast of Mexico, as well as the exploration, production and trade of oil and natural gas.

For China, this deal offers access to both Pemex and the Mexican oil industry, while also signalling continued and greater investment activity throughout Latin America. DaHui structured and co-ordinated all legal work, with assistance from agents and counsel in the various jurisdictions.

Yunnan Jinning-Hongtaqu Highway BOT concession project (US$1.4 billion)

Parties

Legal counsel

PowerChina Road Bridge Group

Zhong Lun Law Firm

This project adopted the public-private partnership (PPP) model, which is relatively new to China, according to Zhong Lun. Local authorities and PowerChina Road Bridge Group jointly invested in the project and will share the risks and earnings. Local authorities used the BOT model to raise funds with a concession term of 30 years. The BOT contract was successfully signed and the highway is under construction.

There were difficulties in negotiations between the two parties to secure relevant subsidies promised by local authorities, and for guarantee measures such as mortgage of land use rights, Zhong Lun said. After the signing of the concession agreement, local authorities did not provide the land use rights mortgage, but the firm provided advice to its client and ensured local authorities fulfilled their obligations. Other difficulties overcome included assisting the client in introducing insurance capital and solving the problem of fundraising against the tightening of monetary policies in China.


Banking & finance

Financing for Alcatel-Lucent Enterprise’s acquisition by China Huaxin (US$250 million)

Parties

Legal counsel

Export-Import Bank of China

Duan & Duan

Gide Loyrette Nouel

The transaction is unprecedented under the unique situation of the operation of the Shanghai Free Trade Zone. Both parties took full advantage of the platform as well as the FTZ rules, according to Duan & Duan. The transaction included a guarantee of outbound interests for domestic security, which was the first case of a guarantee of outbound assets to secure the loan of a domestic FTZ company.

Alcatel-Lucent Enterprise, a subsidiary of Alcatel-Lucent in France, successfully closed the US$250 million transaction with China Huaxin Post & Telecommunication Economy Development Centre, an SOE. China Huaxin and Alcatel-Lucent jointly established a controlling company, which will be responsible for the global operation of Alcatel-Lucent’s enterprises business. China Huaxin holds an 85% stake in the joint venture, while Alcatel-Lucent owns the remaining 15%. Almost all of the acquiring capital comes from a loan provided by the Export-Import Bank of China (EXIM Bank). China Huaxin was established in the FTZ and enjoys the preferential policy and rules of the FTZ in exchange, loan quota and approval procedures. The law firm undertook extensive legal research, designed the structure of the deal and drafted the contract documentation, as well as co-operating with Gide lawyers to draft the pledge agreement, assist pledge procedures, and provide EXIM Bank with the legal memo.

HKT Group’s financing and refinancing for CSL purchase (US$2.5 billion & $1.5 billion)

Part 1: Initial financing (US$2.5 billion)

Parties

Legal counsel

HKT

Conyers Dill & Pearman

Gibson Dunn & Crutcher

Linklaters

Standard Chartered Bank (Hong Kong) Hongkong and Shanghai Banking Corporation

Appleby

The arrangers

Clifford Chance

According to Appleby, the majority of the US$2.5 billion initial financing was to be used by HKT to purchase CSL New World Mobility, a landmark transaction that would create the largest mobile telecommunications operator in Hong Kong with roughly 31% combined market share. HKT is Hong Kong’s premier telecoms service provider, covering local and international telecoms businesses while CSL is Hong Kong’s first mobile network operator and providing services through three separate brands and a number of pre-paid service brands.

Part 2: The refinancing (US$1.5 billion)

Parties

Legal counsel

HKT Group Holdings

Conyers Dill & Pearman (Cayman)

Linklaters

Consortium of 11 banks

Clifford Chance

According to Conyers Dill & Pearman, the terms of this mega loan transaction took the form of 11 bilateral facility agreements with 11 respective banks, each lending to the borrower, HKT, and guaranteed via a facility with a total of HK$11.7 billion (US$1.5 billion) in a revolving credit and term loan facility available to the borrower in connection with the acquisition of the entire issued share capital of CSL New World Mobility.

Conyers advised HKT Group Holdings (the guarantor) as its Cayman Island legal counsel in connection with the 11 bilateral agreements with the banks, and preparations included negotiations on 11 legal opinions and counterparty confirmation under Cayman law, with each agreement conducted simultaneously.

ICBC and BOC’s syndicated secured loan to Fosun (US$675 million)

Parties

Legal counsel

Industrial and Commercial Bank of China (ICBC)

Bank of China (BOC)

Uria Menendez

White & Case

This transaction was one of the largest deals completed by a Chinese non-SOE to date, according to White & Case and Uria Menendez. The success of the deal marked the start of a trend of similar Chinese private sector companies with outbound ambitions, added White & Case.

ICBC and BOC completed their 550 million (US$675 million) syndicated senior secured loan to Millennium Gain, a wholly owned subsidiary of Fosun International, the largest privately owned conglomerate in China, in connection with Fosun’s 1 billion purchase of the insurance arm of Portuguese-owned Caixa Geral de Depositos. The assets purchased included Fidelidade, the leading life and non-life insurance market operator in Portugal, health insurer Multicare, and Cares, a travel and transport insurer.

Uria Menendez said Fosun International purchased 80% of the share capital and voting rights in each of the wholly owned subsidiaries of Caixa Geral de Depositos’ insurance arm, making this the largest acquisition the group has made outside of China. White & Case added the deal also demonstrated the strength of China’s finance industry in successfully executing landmark transactions and guiding enterprises undertaking deals in new markets.

Sinopec Century Bright Capital syndicated loan (US$3.5 billion)

Parties

Legal counsel

TIPTOP Energy

Sinopec Century Bright Capital Investment

Norton Rose Fulbright

Syndicated lenders

Allen & Overy

This deal was geographically well distributed, with a total of 17 banks joining the deal from Asia, North America, Europe, Australia and the Middle East. It was also upsized 40% to US$3.5 billion from the original launch size of US$2.5 billion, making the transaction significant, noted Norton Rose Fulbright.

TIPTOP Energy and Sinopec Century Bright Capital Investment have completed the five-year syndicated term loan facility. The loan was guaranteed by Sinopec Group, one of the largest state-owned petroleum and petrochemical enterprise groups in China. According to Norton Rose Fulbright, China Construction Bank Corporation, The Bank of Tokyo-Mitsubishi, Citi, Hong Kong and Shanghai Banking Corporation, Royal Bank of Scotland and United Overseas Bank acted as the mandated lead arrangers, bookrunners and underwriters to the loan.

Standard Chartered and Hang Seng’s two-tranche financing (US$558 million)

Parties

Legal counsel

Standard Chartered Bank (Hong Kong)

Hang Seng Bank

Baker & McKenzie

Borrowers

White & Case

This deal involved a complicated shareholding and financing structure involving various elements and corporate restructuring at different stages, according to Baker & McKenzie. Standard Chartered Bank and Hang Seng completed the US$558 million two-tranche onshore offshore financing for certain entities being advised by Phoenix Property Investors, a Cayman Island fund management firm.

The financing consisted of a HK$2.2 billion (US$283.7 million) offshore tranche and a RMB1.63 billion (US$268 million) onshore tranche. The offshore tranche, which had a HK$1.86 billion sub-tranche for acquisition of a real estate project and a HK$350 million sub-tranche for further related activities, was collateralised by a mixed used development in the PRC. The onshore tranche was split into a RMB890 million and a RMB740 million facility for two onshore companies holding the project.

Baker & McKenzie said among the challenges of this deal was that the project was initially held by two project companies, instead of one, while the commercial tower had to be spun off for ease of future sale. Also, the fact that this project was not wholly owned by Phoenix Property Investors (being a fund), but a consortium of various funds and corporations co-owned the project, increased the complexity for structuring the financing and documentation negotiations.


Antitrust

IDC antitrust investigation (US$400 million-plus settlement)

Parties

Legal counsel

Huawei Technologies

Tian Yuan Law Firm

The transaction was the first antitrust case resolved by China anti-monopoly enforcement agencies regarding the abuse of a dominant market position in the field of IP law, according to Tian Yuan. It was also the first antitrust case that officially applied the commitment rules in the antitrust law domain, the firm added.

InterDigital Inc (IDC) is a US company holding numerous standard essential patents in the wireless telecoms sector. When Huawei sought a technical licence, Tian Yuan said IDC offered a royalty with a high and discriminative price contrary to fair, reasonable and non-discriminatory (FRAND) obligations. When Huawei declined the terms, IDC filed 377 investigations with the US International Trade Commission and brought civil law suits in US state courts.

Huawei then filed an antitrust investigation application with the NDRC. Tian Yuan provided legal services starting with feasibility analysis of initiating the NDRC investigation, research on applicable Chinese laws and US/EU regulations in relation to standard essential patents and the FRAND obligations, collection and preparation of evidence, and filing of the NDRC investigation application. During the NDRC investigation, IDC voluntarily sought reconciliation and reached a settlement with Huawei by eliminating its suspected monopolistic behaviour. The methods and rationale used in this deal should be the leading reference for future IP cases in antitrust law, said Tian Yuan.

Merger control filing for Thermo Fisher’s acquisition of Life Technologies Corporation (US$13.6 billion)

Parties

Legal counsel

Thermo Fisher Scientific Inc

Axinn Veltrop & Harkrider

Jun He Law Offices

Slaughter and May

This was a massive transaction combining two of the biggest laboratory and life science companies in the world. Slaughter and May noted that the transaction gave rise to over 100 horizontal overlaps in highly complex and technical markets including molecular biology, cell culture protein biology and human leukocyte antigen typing as well as vertical overlaps with respect to Thermo Fisher’s distribution arm. Jun He added that the transaction involved 59 different product markets. The parties proposed commitments to address competition concerns in eight products and the case was cleared with conditions imposed.

The global nature of the transaction and the need for merger control filings in a large number of jurisdictions such as the EU, the US, Canada, China, Japan, South Korea, Australia, New Zealand and Russia, required the development of a clear global strategy and close co-ordination between the regulators, in order to work towards the goal of a single global antitrust solution.

The deal has been held up as a model of global co-operation by the European Commission, MOFCOM and US Federal Trade Commission, Slaughter and May said. It also marked the first time that that MOFCOM published information on the economic assessment which it conducted during its review, demonstrating its willingness to employ economic analysis in merger reviews.