Stephenson Harwood has been instructed on a ground-breaking privatisation in Serbia, becoming one of the first City firms to advise on the reconstruction of the war-torn region.

The firm has been chosen by investment bank Fieldstone Private Capital Group to join a consortium advising Serbia's Government on the privatisation of three metal-processing companies.

Private bidders will then buy the companies, which are spread throughout the country, which has a population of around 12 million.

The privatisation is one of the first to take place in the country, which also needs to rebuild its transport and energy infrastructure.

Belgrade-based firm Jankovic Popovic & Mitic is providing local law expertise on the deal.

Fieldstone Private Capital had chosen Stephensons, the only Anglo-Saxon law firm on the consortium, because of a mutual relationship with accountancy firm Moore Stephens.

The accountants had recognised Stephensons' local knowledge of the Balkans, which dated back to the firms' involvement in Croatia since 1988.

"When it comes to this part of the world, a lot of people just think war and bombs," Stephensons corporate partner Robert Haldane told Legal Week. "But the market will take off here. Privatisation is the first hurdle. Then you will get the bigger things, such as utility companies and IPOs."

Other international firms to have been called in on Serbia's privatisation programme include the local arm of CMS Cameron McKenna and Strommer Hasche Sigle, while Clyde & Co is also developing a presence in Belgrade.

Haldane said he expected the privatisation of the metal-conversion companies to reach due diligence and tender stage by early summer.