Skadden, Arps, Slate, Meagher & Flom LLP, ranked third among legal advisers on global equity sales last year, hired Christopher Betts as a partner for its capital markets and mergers team in Hong Kong.
Betts, who had worked at Paul Hastings LLP and Freshfields Bruckhaus Deringer LLP, is the fourth partner added in Asia in the past seven months as part of New York-based Skadden’s strategy to build its presence in the region for the next decade, according to Asia head Michael Gisser.
“The Hong Kong market is and will remain the preferred listing destination for quality Chinese companies,” Gisser said when asked about the increased scrutiny by regulators in the Chinese city on arrangers of initial public offerings. Hong Kong’s Securities and Futures Commission said last month it may propose rules making IPO sponsors criminally liable for the accuracy of information in prospectuses.
At least six disputes have been publicized this year between auditors and Chinese companies listed in Hong Kong. More than a quarter of Chinese firms that went public on the city’s mainboard in 2010, a record year for volume, have lowered forecasts since they started trading, compared with fewer than 10 percent of non-Chinese companies that had IPOs there that year.
“China and Hong Kong arguably remain the strongest economies in the world, and that’s going to throw off economic activity,” Gisser said. If shareholders in Chinese companies don’t exit through IPOs, they will do so through M&A transactions, he said.
Citic, Sunshine Oilsands
At least 14 U.S. law firms have expanded in Hong Kong since 2010 and hired lawyers who can advise on domestic law. Skadden started the trend in 2005 by luring Dominic Tsun and Nick Norris from London-based firms. They were both hired by Chicago-based Kirkland & Ellis LLP last year.
Skadden advised on Hong Kong IPOs including manganese- mining company Citic Dameng Holdings Ltd. (1091), casino operators Melco Crown Entertainment Ltd. (6883) and Wynn Macau Ltd., and Sunshine Oilsands Ltd. (2012), the Canadian company with major Chinese investors.
Betts, who also previously co-led the Asia-Pacific legal team at McKinsey & Co., said while tougher IPO rules in Hong Kong may deter smaller value listings, the pipeline of work remains strong including the listing in Hong Kong of overseas acquisitions by Chinese state-owned enterprises.
“Over the last decade many of the largest SOEs have set up platforms in Hong Kong,” Betts said. “Over the next decade they’ll be doing more and more deals with those platforms.”
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