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By Paul Hastings Professional
Global Capital Markets: Outlook 2015
What’s Next for Growth Markets
As we progress into the new year, our lawyers share their perspectives on the developments and trends we see impacting growth markets and industries in the year ahead – to help you develop your strategies for 2015 and beyond. We also share highlights of how we have provided innovative counsel to help our clients achieve success.
International Investment in Mexico
The investment appetite of the emerging middle class and important structural reforms in many jurisdictions in Latin America continue to propel equity investment in many parts of the region. Mexico, whose economy is closely tied to the United States, attracts a significant amount of IPO and other investment opportunities. For example, the US$2.5 billion secondary stock offering by Fibra Uno last year, in which Paul Hastings was underwriters’ counsel, was one of the biggest equity offerings ever from Mexico. It is expected that the quasi-privatization of the oil and gas industry after 75 years under government control will generate significant equity offering opportunities. Potential IPO opportunities in Mexico are exemplified by our work advising on FHipo’s first-of-its-kind Mexican mortgage REIT IPO, which marks the next major step in the development of the FIBRA, a REIT-like asset class, in the emerging markets.
UK Leveraged Finance Practice Expands with New Partner Peter Schwartz
Recently, we welcomed leading high-yield finance lawyer Peter Schwartz as a partner in our London office. The arrival of his team strengthens our New York-London Leveraged Finance and Capital Markets practices. Peter is regarded as one of a select group of elite U.S. high-yield lawyers in London.
What’s Next for U.S. Oil & Gas
While no one knows how long US$50 crude oil will last, exploration and production companies are reducing their budgets, in many cases up to 50%, which in turn will impact the entire traditional energy sector. The price war between Saudi Arabia and the U.S. shale producers combined with reduced growth in China and quantitative easing in the Eurozone will continue to put pressure on commodity prices and limit access to public capital markets.
Downstream companies such as gasoline retailer CST Brands have achieved great results in this environment. We assisted CST in its purchase of control of CrossAmerica Partners and the subsequent drop down of fuel assets. In 2015, we expect that companies in the upstream and midstream sectors will primarily access the private capital markets using master limited partnership-like structures and partner with private funds in innovative financing arrangements tailored to their particular asset segments.
Southeast Asian Companies Look Outward
We expect to see Southeast Asian companies flexing their muscles in 2015 by making international acquisitions and investments and raising funds for these activities as they seek to diversify and build their presence both inside and outside the region, particularly given the anticipated reductions in inter-ASEAN tariffs and regulations once the implementation of the ASEAN Economic Community, currently scheduled to occur on December 31, 2015 (but likely to be postponed), eventually takes place.
With the drive toward ASEAN economic integration this year, publicly listed companies in the region are aligning their corporate governance with international best practices. The ASEAN Corporate Governance Scorecard gauges progress in this area and has become a valuable tool for international investors. The scorecard assesses corporate governance practices of publicly listed companies in six participating ASEAN member countries.
To learn more about the latest legal and market developments impacting international investors in the Philippines, look for our next issue of Access Philippines, due in March.
HK Listings, Healthcare Top China Outlook
Even with its recent slowdown, China continues to be one of the fastest growing economies in the world – and in 2014 it made significant amendments to its capital markets infrastructure both in Hong Kong and on the mainland. We expect Hong Kong listings for companies with Chinese backgrounds to continue to grow in early 2015. Following our work on WH Group’s successful US$2.36 Billion Hong Kong IPO, we anticipate that further listings for agribusiness, consumer goods, and healthcare companies, in particular may attract more attention from investors.
As China continues to grapple with both an aging population and low spending on healthcare compared with developed economies, the healthcare industry – including privately operated hospitals – will continue to draw investment. We expect to see considerable capital markets activity for healthcare companies and medical device makers.
Recent Client Successes
US$633M first-ever Mexican mortgage REIT IPO
Largest equity offering in the real estate sector in Latin America
Innovative structure to obtain critical financing
US$555M rights offering
Largest primary follow-on offering in the FIG sector for past 3 years globally
One of the largest Korea IPOs in 2014
US$435M follow-on public offering of common stock
€200M senior secured notes