It was a race against the Johannesburg Stock Exchange when CCMP Capital Asia (formerly JP Morgan Partners Asia) bought out global industrial services group Waco International Limited for 5.4 billion South African rand (approximately $1.2 billion).
In what was a truly international transaction, Baker & McKenzie acted for the buyer, led by Mark McNamara from the firm’s Sydney office, and Freehills acted for the seller, led by Rick Narev from the Sydney office. McNamara said it was the first time a leveraged management buy-out had surpassed the $1 billion mark in Australia and was the largest private equity deal in South Africa and Australia to date.
Narev said the most interesting part of the deal was that the sellers were initially preparing for an IPO, either in South Africa or Australia. They decided to list on the Johannesburg Stock Exchange because it lacked the regulatory issues of the Australian Stock Exchange.
With the due diligence and prospectus completed, the sellers appointed advisers and brokers and commenced talks with institutions to determine the level of interest. It became apparent there was a lot of interest from private equity funds.
Convinced they would do better out of an IPO than a trade sale, the sellers none the less decided to run a dual-track process. “The sellers were so keen to do an IPO they were initially very indifferent to [CCMP] in the negotiations,” Narev said.
“As a result we got a deal for the sellers that went beyond anything I have seen in Australia before.”
McNamara said his team was “really up against it in terms of time and [presenting] a deal that would do better than an IPO. “We offered them a proposal which was clean and in a timetable sense gave them a financial outcome that was comparable with the IPO.”
Adding to the complexity, the deal involved six different jurisdictions — Australia, New Zealand, the UK, South Africa, China and Mauritius.
Freehills was assisted in its role as global lead counsel for the sellers by Linklaters in London, Fluxmans in South Africa and law firms in the other four international jurisdictions. Narev was assisted by solicitor Kate Logan from the firm’s Sydney office. Baker & McKenzie’s team also included lawyers from its Melbourne and London offices, and other global offices as required.
Cliffe Dekker and Buddle Findlay advised CCMP on the South African and New Zealand aspects of the transaction.
The fact that this transaction was run by Australian lawyers was “very much a coup for us”, Narev said. Freehills was also given permission to act for the lenders to the buyer, UBS.