'It's a game changer' – Allen & Overy plots more NY expansion after five-partner team hire
Facing pressure from US firms in Europe, how does A&O expect to balance the scales in New York?
September 14, 2016 at 08:11 AM
5 minute read
The collective struggles of the magic circle to crack America are well documented. Allen & Overy (A&O), however, is hoping its recent addition of five partners in New York will be a watershed moment for the firm.
The team is led by senior leveraged finance partner Scott Zemser, who joined from White & Case, along with finance partners Alan Rockwell and Judah Frogel. It also includes banking partner Rajani Gupta from Proskauer Rose and Todd Koretzky, who joined from Milbank Tweed Hadley & McCloy, where he was an associate.
A&O is now out to prove that the hire of the team, some of whom it broke lockstep for, will be a turning point for the firm in the US and its global finance practice as it gives them more firepower to tackle foreign finance deals under New York law.
Global banking co-head Philip Bowden says: "This team gives the rest of our finance platform in the Americas a real boost and tells the market we are serious. It's a game changer for our global finance offering. New York law is very relevant for the US domestic market but also, in the past three years or so it has become increasingly relevant in Europe and Asia.
"You will have a European issuer deciding to do a deal under New York law because they want to tap the US investor base. Earlier this year, we did a fairly large deal with a Chinese investor who wanted to do a New York law term loan B financing. Historically, it has been difficult for international firms not headquartered in New York to compete with the US-based firms for these deals."
The team addition increases the number of banking and finance partners in the New York office from 15 to 20 and Bowden says this is the start of further growth in the New York office.
"We have to consider what our long-term strategy is. So far, a merger [in the US] has not been possible to achieve – if you can't merge, you have to grow.
"It's no secret we want to hire a senior high yield bond player to complement the team in New York and we are actively looking at that," he says. "It's something you need when sitting around with banks discussing debt structures and we think in the long run, the team in Europe will benefit from it."
The new hires have worked with some of the New York office's existing clients, which include Bank of America, BNP Paribas, Credit Suisse, Deutsche Bank, Goldman Sachs and JP Morgan.
However, the timing means the hires have risked being overshadowed by exits from A&O in the more standard direction of travel between US and UK firms.
This summer, Latham & Watkins hired A&O's former banking head (and senior partner contender) Stephen Kensell in London, returning earlier this month to take EMEA equity capital markets practice co-head Oliver Seiler in Germany. A&O also lost a corporate partner to Cleary Gottlieb Steen & Hamilton in Germany earlier this month.
Despite these exits and Latham making a number of other finance hires during the summer, including the recruitment of Slaughter and May finance partner Sanjev Warna-kula-suriya, new recruit Zemser is undaunted about the challenge ahead.
He says: "Coming from a US firm and being very involved in its London growth strategy, you see how much of a difficult market it is for US firms to crack. Latham has done a terrific job growing in London and others have been trying to get up to speed. I believe now we will see more head-on competition between us and Latham."
Rockwell adds: "Some of the larger, more global-focused US firms have done a decent job at expansion in London but up until now it's been a challenge for international firms not headquartered in America to pull off the same trick in the US." He says there were "literally a handful of firms" that the trio could have moved to and cites A&O's bench-strength in Europe and Asia as a major pull factor.
While the new team is clearly happy with the move, the onus will very much be on them to back up the talk with demonstrable evidence of success across the pond. Until hires turn into deal flow and new client wins, it seems unlikely that the Wall Street elite will spend too many sleepless nights worrying about the progress of UK firms on the other side of the Atlantic.
Pictured above (left to right): Zemser, Gupta, Rockwell and Koretzky
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