Maples Group is reassessing its strategy in China, said Michael Gagie, the law firm’s new Asia regional managing partner.
Gagie, who was appointed to the post in March, said Chinese Journal of Business Law that the company would continue to focus on corporate work, in particular equity-related mandates involving initial and secondary public offerings and merger and acquisition transactions, in the short term, but, at the same time, the company takes stock of opportunities in the wealth and funds private sector.
“Maples already has some exposure to the world of private clients,” Gagie said. “We help high net worth individuals starting their own fund management business or, in a pre-IPO scenario, founders of a business considering an overseas IPO. They often set up employee benefit trusts to incentivize their employees for the long term. “
Gagie said many wealthy people in China are considering setting up family offices in popular jurisdictions like Jersey. He said he had seen a slight increase in mainland-based private equity funds developing new offshore vehicles this year. “We have seen a real increase in new structures, trusts or other offshore creations, and more money raised. So there is the opportunity to work with customers in terms of deployment. “
Gagie said the majority of Maples customers are from China. “Equity capital markets have been a huge part of our practice in China,” he said. “Historically, and now, with the PSPCs [special purpose acquisition companies] and with listings in Hong Kong, Shanghai Star Market, NYSE, and Nasdaq in the US, and now with the Singapore Stock Exchange allowing SPAC listings, we have a very large stable of listed clients that we work with.
Gagie noted that the growing demand for offshore vehicles by Asian companies over the past five years has been fueled by the growth of Chinese companies establishing pre-IPO structures to register in Hong Kong and the United States with vehicles. offshore.
Despite China and the United States’ tightening regulatory control over Chinese IPOs, Maples is confident in helping clients deal with headwinds caused by market volatility, regulatory developments and other factors. such as the pandemic.
IPOs in the United States by Chinese companies have slowed since July, with both governments setting new requirements targeting companies using the variable interest entity structure (VIE), with development affecting offshore as they are commonly used as holding companies and ultimately as issuing vehicles in public companies. Advertisement.
But it also opens up new opportunities for law firms, as more “back home” registrations are expected, according to Matt Roberts, head of corporate practices for Asia at Maples. “The HKEX is currently the primary potential alternative listing platform to the NYSE and Nasdaq thanks to its large pool of investor liquidity, its preeminent position, its Weighted Voting Rights (WVR) regime and its fast lane for secondary listings. “, did he declare. Chinese companies with VIE structures could also sell Chinese Certificates of Deposit (CDRs) on the mainland.
Shortly after the HKEX listing reform in 2018, Maples acted for Xiaomi, which was the first in Hong Kong to go public with a WVR structure. The company has represented tech giants including Alibaba, JD.com and Baidu on their secondary rosters in the city.
“We believe Maples is therefore in a good position to assist our customers as we navigate a clearly fluid space,” said Roberts.
Gagie said the company has been busy helping Asian businesses pre-register and raise funds overseas. “What we have seen over the past couple of years is that there is a growing interest in the jurisdictions where we operate, especially for companies in Asia looking for exposure or access. to investors in Europe, “he said.
The trend persisted throughout the pandemic. “Many tech companies are funded by investors using Cayman vehicles, including Cayman fund structures,” he said. “In turn, these tech companies then seek access to public capital markets by using offshore vehicles for their listings.
“Cayman was the first choice for private equity and hedge fund structures and for work in public companies. I think the more sophisticated clients we work with have both Cayman and BVI in their group structures.
With global asset managers from Goldman Sachs to Standard Chartered looking to break into the Chinese market, Gagie. China’s opening up of its financial sector could create opportunities for law firms and international courts, he said.
“This is a further step in terms of the evolution and development of the financial services sector in mainland China, and I hope that we and the other jurisdictions we represent will have a role to play in participating in it,” he said. -he declares.