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Clifford Chance focuses on key issues for investors in Africa at its Third African Counsel Retreat

10 March 2016

Clifford Chance focuses on key issues for investors in Africa at its Third African Counsel Retreat

A recent event hosted by leading international law firm Clifford Chance brought together members of African law firms and representatives of African and international corporations and financial institutions to discuss various aspects of business on the continent. It focused on the continued importance of the power and financial M&A sectors in Africa, as well as the best ways to manage risks and comply with sanctions, the rise of platform deals and the constantly developing nature of clients' needs. Over 60 counsel representing 50 law firms from 23 African countries attended the two-day African Counsel Retreat in Dubai. A number of clients attended the retreat, including over 50 delegates from sectors ranging from financial institutions to oil and gas. This year the event was held in Dubai recognising that many international and Middle Eastern companies continue to use Dubai and the wider region as a hub for servicing the African continent.

The Clifford Chance African Counsel Retreat brings together Clifford Chance lawyers and leading African counsel with whom the firm works on a regular basis to strengthen existing ties further, improve working practices, enhance knowledge sharing and management processes as well as to exchange insights on current legal topics

Key themes included:

Risk and reputation management - African markets are increasingly open for business and despite ongoing perceptions of it as an enhanced-risk zone, the reality is that risks in Africa are not necessarily different from those in other jurisdictions. This is increasingly the case as business conduct falls more and more in line with UK and US sanctions regulations , meaning that risks traditionally seen as specific to Africa are diminishing in importance. Experts participating in a panel discussion examining how local and international investors in Africa are addressing risk agreed that Africa's diversity and complex legal and business framework creates the need for flexibility in any successful business strategy. Sanctions regimes also create a complex environment for activity, and sharing experience of complying with these proved a useful discussion.

Financial services M&A: Africa continues to be seen as a highly attractive market due to its large population with relatively low penetration. The market is seeing legal stability and more investor friendly environments with an increasingly skilled workforce. Organisations that have entered the market frequently see it generating their highest growth and a significant number of our clients recognise that implementing an Africa strategy is critical to their long term plans. The retreat covered market insights and trends from, among other areas, banking, insurance and FinTech.

Strength of the Power sector - The power sector shows no sign of slowing as activity in Africa continues to gain momentum. This year, we expect to see a similar volume of ground-breaking deals. Recent work includes advising on the award-winning US$825m Maamba Power Project in Zambia and the ground-breaking Azura Edo IPP in Nigeria and the first IPP (geothermal) in Ethiopia.

Platform transactions- Africa is fertile ground for private equity houses scouring the globe for companies which can reap the level of returns their investors demand, but one of the most pressing issues for global and pan-regional private equity houses is size. The lack of strong big businesses is a product of the fragmented nature of the continent's markets, but platform investments turn this challenge into an opportunity by combining smaller businesses with a domestic focus to create a successful and complete platform for investors.

Anthony Giustini, co-head of Clifford Chance's Africa practice, said: "Our priority is client service and we are committed to supporting our colleagues in African firms to ensure that investors across Africa experience this first hand. I'm once again delighted that so many of our African colleagues joined us at this year's retreat to reflect on the opportunities, challenges and legal and business issues faced by those investing in the region."