Transactions are the lifeblood of any corporate law firm, and are a telling indicator of economic health. Over the past year, for example, a definite dwindling accompanied the period around Sars, although recent months have seen the beginnings of a rebound. One of the more high-profile mergers and acquisitions (M&A) of the past year concerns Cheung Kong (Holding's) sale of five shopping malls to a Singapore real estate investment trust (REIT) in August, the first time a Hong Kong developer has been involved with a listed REIT. Cheung Kong made the sale to Fortune REIT, and the aggregate acquisition value of the properties sold was about $3.1 billion. Fortune REIT raised in excess of $2 billion through its initial public offering in Singapore and an international placement to institutional and other investors. The deal is doubly significant because of the Hong Kong government's attempts to turn the city into a regional hub for REIT investments. Baker & McKenzie advised Cheung Kong on the transaction, and partner Milton Cheng believes that it paves the way for similar activity in Hong Kong. 'We believe this deal, particularly in light of the recent introduction of a REIT regulatory framework in Hong Kong, leads the way for similar transactions in Hong Kong,' he says. 'Baker & McKenzie's involvement in this first-to-market deal puts us in a good position to capitalise on this exciting new development in the Hong Kong property and securities markets.' Another headline-grabbing transaction was HSBC's $3 million synthetic securitisation of taxi and public light bus hire purchase agreements, originated and serviced by HSBC's commercial banking division in Hong Kong. The deal marked the first synthetic securitisation to feature this asset class and the first balance sheet securitisation to feature a portfolio of non-mortgage consumer and SME obligors in Asia. It was also the first time that HSBC had undertaken a securitisation referenced to assets on its own balance sheet. Sidley Austin Brown & Wood advised HSBC on the deal, with a team led by Balbir Bindra. 'Most securitisations in Asia have involved the sale of the asset portfolio to an offshore trust, so that both the credit risk and ownership are sold on to investors,' Mr Bindra. 'The attraction of a synthetic structure is that it can help a bank repackage its credit exposure and re-allocate risk while improving its capital adequacy ratios and enhancing its return on capital. We are confident that this transaction will pave the way for other banks in the region to manage their balance sheets in this way.' Another impressive corporate finance transaction came courtesy of the Hong Kong government, through the Hong Kong Mortgage Corporation's $3 billion issue from its Bauhinia MBS programme. Mallesons and Freshfields Bruckhaus Deringer advised on this transaction, which marked Hong Kong's largest mortgage-backed securitisation to date. Mallesons partner Adrienne Showering believes the deal signals a major step forward for the local corporate finance market. 'We are expecting more high-profile corporate finance deals in Hong Kong next year,' she says. 'It is expected that the Hong Kong government's toll roads and tunnels securitisation will come to the market in the first half of next year.'
