Special Focus: US
US clients looking for acquisitions in Latin
America
A crucial task for law firms is creating agreements that safeguard clients´ interests by
complying with local law while not being governed by it
Latin American markets such as Brazil,
Panama, Colombia and Peru are
providing law firms with significant
opportunities for cross-border work,
particularly in energy, oil and gas
exploration, infrastructure, financial
services and consumer products,
according to Hunton & Williams’
Fernando C. Alonso, chairman of the
firm’s Latin American Practice Group.
He adds that one of the key
challenges facing firms handling
cross-border deals is ensuring that
agreements are governed by the laws
of a jurisdiction that is respected and
can be relied upon by all parties.
Meanwhile, from a strategic perspective,
Alonso argues that law firms do not
necessarily need an office in Latin
America to represent clients operating
in the region. However, they do need
good relationships or alliances with local
firms.
What opportunities currently exist
for legal work in Latin America? Alonso
says international law firms are picking
up numerous instructions in Brazil,
where US corporate clients have been
very acquisitive despite talk of a pause
in growth. Meanwhile, in Colombia and
Peru, there has been an explosion in
energy, infrastructure and oil a nd gas
exploration, which is also generating
considerable work for lawyers. In
addition, international clients are also
investing in infrastructure projects
in Panama. Alonso adds that US and
European clients in Panama have
sought legal advice on all aspects of
construction projects as well as the
resolution of claims.
Creating agreements that effectively
safeguard clients´ interests by ensuring
they comply with local law, while not
being governed by it, is one of the most
important tasks facing firms working
on cross-border deals. “Our goal with
any cross-border deal is to provide the
optimum structure so as to protect our
client’s investment,” Alonso explains.
“We usually prepare agreements that
are not governed by local law but by a
jurisdiction that respects local law and
is grounded on common law principles
where contractual rights are paramount
– frequently this will be New York law
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with arbitration in New York or Miami.”
Alonso says that, on the whole, Latin
American countries have been very
receptive and comfortable with this
approach, with the possible exception of
Brazil, where some hesitation remains.
“We are often working opposite large
local firms, which are well versed in
standard US commercial and financing
agreements.”
Deal flow ranges from acquisitions
to joint ventures, and often includes
elaborate shareholder agreements.
In a recent case, a client sought to
purchase a minority stake in a company
but still required significant investor
protections and a say in the company’s
management. Recent major deals
include the acquisition by Promerica
Financial Corporation of a 56 per cent
stake in Banco de la Producción S.A.,
now Ecuador’s second largest financial
institution.
Fernando C Alonso
No need for Latin American office
Alonso adds that it is not essential for
a law firm to have an office in Latin
America in order to successfully serve
clients in the region. “We don’t foresee
a need to be based in any single Latin
American jurisdiction – we are bringing
an international standard into play on
these transactions, and Miami is a very
comfortable jurisdiction from which to
do business in Latin America, and for
Latin Americans generally.”
Alonso says that it is often beneficial
to use local firms in Latin America
to carry out due diligence in relation
to deals. He adds: “There is often
interplay with local firms in the relevant
jurisdiction to deal with due diligence of
local entities where necessary – we have
several ‘close friends’ relationships with
firms in the region to aid this process”.
Alonso predicts further investment of
all types in the region; and in particular
in those countries considered ´safe´
for investment, such as Mexico, Chile,
Colombia, Brazil and Peru. Which
legal market players are best-placed to
benefit from this increase in investment?
In addition to the Magic Circle firms,
Alonso believes that New York and
Miami firms will continue to play a
central role in the region.
November / December 2014 • IBERIAN LAWYER • 55