Two corporate transactions worth US$542m separated the men from the boys
By Mark Muhumuza
In 2013, Uganda had two major million dollar mergers and acquisitions (M&A’s), which required the services of law firms. There was Actis, which sold 45percent stake in Dfcu Bank to Norfund and Rabo Bank at a total of US$42m. Additionally, there was the Airtel acquisition of Warid Telecom Uganda LLC worth US$500m. These were the largest corporate deals in 2013 though there were other transactions – not made public – that had law firms scampering to provide services. In October, The International Financial Law Review (IFLR) released its latest rankings [IFLR100 2014] of which Uganda’s tier 1 firms reduced from five to four. Shonubi Musoke & Co – one of the largest commercial law firms in Uganda – dropped to tier 2 although the rankings body indicates that “…a fine line separates the two tiers in the market.” The rankings are not exactly inclined to the largest deals, but there is a focus on client satisfaction. A drop in rankings means client satisfaction has dropped after the rankings body has carried out research.
Katende Ssempebwa & co
The two big M&A’s in the country in 2013 made four of the tier 1 firms smile all the way to the bank. Katende Ssempebwa advised Warid Telecom in the US$500m merger with Airtel, the largest corporate transaction in 2013. Bharti Airtel acquired Warid, and then merged it with Airtel Uganda to form Uganda’s second largest telecom company. The firm is widely respected and is the largest corporate law firm in Uganda [est. 1969]. On this deal alone, the law firm got a handsome pay day, keeping them in the top tier. It prides its self with some of the most experienced lawyers in Uganda – and East Africa – namely, Frederick Ssempebwa and John Katende.
In 2013, the firm also won a deal to advise the government on the US$3bn planned oil refinery in western Uganda.
“The past 12 months has seen the firm advising the government, with Eversheds, on the $3 billion construction of an oil refinery. The firm has also advised Total, Puma, American Tower Corporation (ATC) and the African Development Bank (ADB). A big deal saw the firm assist Warid Telecom Uganda on its $500 million merger with Bharti Airtel,” read notes from IFLR1000.
AF Mpanga, Associates
When Bharti Airtel paid US$500m for Warid Telecom, AF Mpanga advised the company [Airtel]. The law firm, is the youngest of Uganda’s tier 1 firms, but has risen through the rankings to become part of this elite group. According to IFLR1000, the firm “…consolidated its position as a top tier firm in 2012 with the recruitment of Julius Musoke, former principal counsel of the African Development Bank (ADB).”
It also boasts of being a local law firm that advises the Chinese oil company CNOOC, which recently acquired the first oil production license in Uganda. It is projected that CNOOC will invest US$2bn in the next three years. The firm has been involved in other oil and gas deals, including Schlumberger – an oil field service provider -, PDL Toll from Australia and also council for Oryx Oil and Gas SA, which recently acquired Engen’s retail market outlets in Uganda.
It also advises and sits on the panel of some of Uganda’s banks, Stanbic Bank, Equity Bank, Citibank and also advises regulators like Bank of Uganda and Capital Markets Authority.
The addition of Musoke is noted to have offered client appreciation, as one of them [clients] is quoted by IFLR1000 saying “Musoke has the added advantage of his experience as legal counsel at the African Development Bank, which has given him not only great banking skills but also sector knowledge, specifically telecommunications.”
It is also a member of the Bowman Gilfillan Africa Group, which boasts of 400 lawyers across Africa. This gives the firm the opportunity to tap into the broader African legal knowledge.
Sebalu & Lule
The Rabo Bank 27.5percent stake acquisition in Dfcu Bank was through the advisory services of Sebalu and Lule. The transaction was worth Ushs68.4bn. Sebalu and Lule had also advised NORFUND, which increased its stake in Dfcu Bank to 27.5percent after acquiring an additional 17percent stake from Actis. This was the major advisory business the firm did in 2013.
“The team has been active in banking and capital markets transactions in the last 12 months, advising the East African Development Bank (EADB) on its Ugandan Stock Exchange listed multi-currency MTN programme [AfDP bond programme] and Vine Pharmaceutical on a convertible debt investment by Aureos. The team also advised Rabo Development on its acquisition of a 27.5% stake in the listed DFCU Bank,” reads the footnote at the IFLR rankings for the firm.
In February 2013, the same firm working together with the Attorney General’s office, in a last ditch effort saved NSSF from paying close to Ushs40bn and Ushs20bn – legal costs – to a company called Alcon International. They won this case – Alcon claiming compensation – in Uganda’s highest court, although legal costs were awarded – Ushs4bn. The law firm is contesting the award of these costs to the lawyers of Alcon International.
The firm is currently involved in a case against Harris International – makers of Riham Cola – on behalf of their clients, Coca-Cola. Hima Cement is also one of their clients.
The firm is credited – by clients – for its turnaround time and quick response and the linkage it has with leading international firm, DLA Piper. “Quick response time within 24 hours with various solutions on how to approach different issues in contention,” a client is quoted. The firm is headed by Barnabas Tumusingize as the managing partner.
When Actis sold a 45percent in Dfcu Bank, MMAKS was the law firm that advised them on the transaction. MMAKS according to the IFLR1000 research is one of the top two Ugandan in “corporate finance matters.” This is because of the firms focus on commercial transactions and other corporate law transactions.
“In the past 12 months, the team advised on local law issues for a substantial restructuring of an international bank’s activities in Uganda and also advised a private equity firm on a significant sale of its stake in a local bank. The deals place the firm in some of the higher profile mandates of the past year,” IFLR1000 reads.
The Actis sale transaction alone was about US$42m of which, the law firm bagged impressive legal fees. In December 2012, they also acted on behalf of Actis when Umeme listed on the stock exchange. A transaction was valued at Ushs171bn. Meaning that in 6months, the firm had increased revenues. Clients who talked to IFLR1000 were impressed by the Rachael Magona, the head of banking and finance at the law firm.
A review of her performance reads: Magona; “…is one of Uganda’s finest lawyers- she is able to understand the transaction at hand and offer advice that takes into account both legal and commercial considerations hence ensuring agreement of all contracting parties within excellent timeframes”.
“I would not trust any other local counsel to run a syndicated deal the way I trust MMAKS Advocate,” another client is quoted.
All these IFLR1000 tier 1 firms are also in the top band of another rankings body, Chambers and Partners – including Shonubi Musoke. Notably, the recent rankings do indicate a rise in corporate transactions and litigation. The top four firms were also involved in the two of the highly publicized mergers and acquisitions of 2013. An observation further points to increased activity in the mining, oil and gas sectors, with more of these top tier firms aligning themselves to tap these resources.