Mid Year Review / Global Outlook
By Fabio Trevisan
Posted: 19th September 2012 08:39
The negative impact of the economic downturn in 2009 and 2010 has led to a global reduction of M&A transactions. However, in the Luxembourg market, with its specific emphasis on financial activities, it is fair to say that the impact of the economic downturn has been limited, which is still true for 2012 so far.
Parties involved in M&A transactions have adopted a “wait and see” approach for some months, but on the other hand there has been a large emphasis on insolvency and corporate restructurings.
The credit crunch has negatively impacted private market activities since the end of 2009 up to mid 2010. The third quarter of 2010 showed encouraging signs with investors seeking opportunities, leading to a significant increase of activity in the course of 2011. However, even though this period showed the strongest performance since the collapse of Lehman Brothers, completing deals in the second half of 2011 and first of 2012 was challenging. During this period, investors adopted a careful approach with a preference for highly selective transactions.
There is strong potential for rebound in M&A activities. Private equity houses are still operating with significant amounts of funds available and will become progressively more active as acquisition opportunities emerge and the debt market starts to recover.
Finally, a clear change in the balance of economic power has appeared with the emergence of wealthy investors originating in Asia and Brazil, Russia, India, China (BRIC) and Middle East countries. This has been evidenced in Luxembourg with three major investments made by Qatar investors: (i) Qatar Airways acquired a 35% stake in Luxembourg based airplane carrier Cargolux, a worldwide leader in this field; (ii) Qatar investment group acquired Belgian KBC’s Luxembourg private banking subsidiary KBL for a total consideration of €1 billion (as at 1 March 2012, US$1 was about €0.74); (iii) a group made up of members of the Qatar royal family entered into an agreement with the State of the Grand Duchy of Luxembourg, acquiring a 90% stake in Dexia Bil, the outstanding 10% remaining with the Grand Duchy of Luxembourg.
As of March Luxembourg imports for the first quarter 2010 are worth approximately €2,795 million. They were worth €2,755 millions for the same period 2011, being slightly up.
The exports for the first quarter of 2012 are approximately of €1838.9 million. They were worth approximately 1974 millions, being slightly down.
One of the reasons for the decrease in exports is that some 80% of Luxembourgish exports go to other EU countries where growth is expected to contract this year. Furthermore financial services constitute approximately 50% of the total exports it is highly likely that the turmoil and volatility on financial market will likely affect further the volume of export in this sector.
Despite of the international financial crisis, Luxembourg has still a competitive business environment and we are a financially healthy country.
In fact, the country is stable and we benefit of a high-income economy. Furthermore, our proximity to France, Belgium and Germany gives to Luxembourg a highly strategic position in Europe.
We also benefit of a skilled multilingual workforce and flexible and welcoming authorities which facilitate the development of business in Luxembourg.
Thus, Luxembourg is very much the “place to be”.
Bonn Steichen & Partners
Bonn Steichen & Partners is a full service Luxembourg law firm committed to providing the highest quality legal services. Considering the fast moving world in which we live and the hostile business environment our clients may face, our experience grows continuously with the needs of our clients and our lawyers are required to remain attentive in order to constantly adapt themselves to new laws and regulations, situations and challenges.
We have an innovative and pragmatic oriented approach in the manner to manage our legal services for our clients to which we are offering the full spectrum of corporate work. Sharing knowledge, experience and time, are key words, but also, collegiality, trust and respect, which are the guiding principles under which we work every day.
We aim for legal excellence and have a significant expertise representing, advising and acting for our clients on all types of corporate and M&A deals.
Every year, we are recommended by legal organisations and winners of legal awards.
This year, we have been recommended by the Legal 500, we have, also, been designated as the Luxembourg best law firm by the General Intellectual Property Report and we won the International Law Office Client Choice with Pierre-Alexandre winning the award for the second year in a row.
Fabio TREVISAN has been nominated by WHO’S WHO LEGAL as the leading practitioner in Luxembourg in Asset Recovery and Commercial Litigation.
Furthermore, according to Finance Monthly Global awards 2012 we are the Tax Law Firm of the Year and Alain STEICHEN, partner, won the Best Lawyer of the year 2012 in the practice area of tax award.