Kennedys bid to combine with Gates seen as astute move into competitive sector. Suzanna Ring reports

Kennedys is planning to break into the aviation market, with the insurance specialist in early-stage merger talks with boutique outfit Gates and Partners. 

Should the tie-up go ahead, it would see Kennedys move into a sector currently monopolised by a handful of firms including Clyde & Co, Holman Fenwick Willan, Norton Rose and Stephenson Harwood. It is understood talks between the pair have only been ongoing for several weeks. 

Gates has roughly 54 lawyers, including 25 partners, with offices in London, Singapore, Brussels, Paris and Dubai, which the firm opened with the hire of two Clydes lawyers last year.

The firm, which is top-ranked for London and UK aviation advice by Chambers and Partners, was launched in 2003 by three partners from legacy aviation boutique Beaumont & Son – Sean Gates, Adosh Chatrath and Daniel Soffin.

Clydes subsequently took over Beaumonts in 2005, with all 17 remaining partners joining the firm, as part of a wider play to grow in the aviation sector.

Gates' practice is regarded as a good fit with Kennedys as it focuses on the aviation insurance market, with rivals speculating that a tie-up could also provide the investment power to expand into other areas of aerospace work. 

One aviation partner at a rival firm said: "I'm not surprised this is happening. I always wondered how Gates would sustain itself in the long term given it built up and expanded quite quickly. The business is also very centred around their senior partner Sean Gates, who will no doubt be thinking about what the best exit plan is for him and for the firm.

"Gates emerged in the advent of the jet age when there were a lot of crashes and insurance work was rife, but now that the world is safer they may need to look at developing out the practice into other areas."

Stephenson Harwood global head of aviation Paul Ng commented: "The fastest growth markets in the sector are still in Asia, so it may be that they are looking to achieve through the tie-up a bigger platform to penetrate markets outside Europe, which continues to be depressed."

An aviation partner at another rival firm commented: "Clearly Gates has got a very good name for itself with a number of partners with good reputations. Kennedys of course has a very good insurance name and no aviation practice, so in a sense it would be a happy mix.

"Aviation insurance is a bizarrely focused market and you need to take a mature team if you're going to do it, but there are very few around so, if this happens, I'm sure Kennedys will be pleased with itself."

News of Kennedys' proposed merger comes after legacy Barlow Lyde & Gilbert's highly regarded eight-partner aerospace team resigned from the firm to join Holman Fenwick in March 2011.

The team's departure is known to have played a significant role in Barlows' decision to merge with Clydes in November 2011.

Kennedys has expanded significantly in recent years, merging with its Dublin associate office O'Hare O'Connor Walshe in June 2011 – the same month that it launched a presence in Brazil through an association with local practice Torres Marcellino & Associados.

The firm also broke through the £100m revenue mark for the first time this year, with financial results for 2011-12 showing a 12.7% turnover increase on last year to reach £109.1m.

Kennedys and Gates declined to comment.