Advisory Board

  • Cai Hongbin
  • Peking University Guanghua School of Management
  • Peter Clarke
  • Barry Diller
  • IAC/InterActiveCorp
  • Fu Chengyu
  • China National Petrochemical Corporation (Sinopec Group)
  • Richard J. Gnodde
  • Goldman Sachs International
  • Lodewijk Hijmans van den Bergh
  • De Brauw Blackstone Westbroek N.V.
  • Jiang Jianqing
  • Industrial and Commercial Bank of China, Ltd. (ICBC)
  • Handel Lee
  • King & Wood Mallesons
  • Richard Li
  • PCCW Limited
  • Pacific Century Group
  • Liew Mun Leong
  • Changi Airport Group
  • Martin Lipton
  • New York University
  • Wachtell, Lipton, Rosen & Katz
  • Liu Mingkang
  • China Banking Regulatory Commission (CBRC)
  • Dinesh C. Paliwal
  • Harman International Industries
  • Leon Pasternak
  • BCC Partners
  • Tim Payne
  • Brunswick Group
  • Joseph R. Perella
  • Perella Weinberg Partners
  • Baron David de Rothschild
  • N M Rothschild & Sons Limited
  • Dilhan Pillay Sandrasegara
  • Temasek International Pte. Ltd.
  • Shao Ning
  • State-owned Assets Supervision and Administration Commission of the State Council of China (SASAC)
  • John W. Snow
  • Cerberus Capital Management, L.P.
  • Former U.S. Secretary of Treasury
  • Bharat Vasani
  • Tata Group
  • Wang Junfeng
  • King & Wood Mallesons
  • Wang Kejin
  • China Banking Regulatory Commission (CBRC)
  • Wei Jiafu
  • Kazakhstan Potash Corporation Limited
  • Yang Chao
  • China Life Insurance Co. Ltd.
  • Zhu Min
  • International Monetary Fund

Legal Roundtable

  • Dimitry Afanasiev
  • Egorov Puginsky Afanasiev and Partners (Moscow)
  • William T. Allen
  • NYU Stern School of Business
  • Wachtell, Lipton, Rosen & Katz (New York)
  • Johan Aalto
  • Hannes Snellman Attorneys Ltd (Finland)
  • Nigel P. G. Boardman
  • Slaughter and May (London)
  • Willem J.L. Calkoen
  • NautaDutilh N.V. (Rotterdam)
  • Peter Callens
  • Loyens & Loeff (Brussels)
  • Bertrand Cardi
  • Darrois Villey Maillot & Brochier (Paris)
  • Santiago Carregal
  • Marval, O’Farrell & Mairal (Buenos Aires)
  • Martín Carrizosa
  • Philippi Prietocarrizosa & Uría (Bogotá)
  • Carlos G. Cordero G.
  • Aleman, Cordero, Galindo & Lee (Panama)
  • Ewen Crouch
  • Allens (Sydney)
  • Adam O. Emmerich
  • Wachtell, Lipton, Rosen & Katz (New York)
  • Rachel Eng
  • WongPartnership (Singapore)
  • Sergio Erede
  • BonelliErede (Milan)
  • Kenichi Fujinawa
  • Nagashima Ohno & Tsunematsu (Tokyo)
  • Manuel Galicia Romero
  • Galicia Abogados (Mexico City)
  • Danny Gilbert
  • Gilbert + Tobin (Sydney)
  • Vladimíra Glatzová
  • Glatzová & Co. (Prague)
  • Juan Miguel Goenechea
  • Uría Menéndez (Madrid)
  • Andrey A. Goltsblat
  • Goltsblat BLP (Moscow)
  • Juan Francisco Gutiérrez I.
  • Philippi Prietocarrizosa & Uría (Santiago)
  • Fang He
  • Jun He Law Offices (Beijing)
  • Christian Herbst
  • Schönherr (Vienna)
  • Lodewijk Hijmans van den Bergh
  • De Brauw Blackstone Westbroek N.V. (Amsterdam)
  • Hein Hooghoudt
  • NautaDutilh N.V. (Amsterdam)
  • Sameer Huda
  • Hadef & Partners (Dubai)
  • Masakazu Iwakura
  • TMI Associates (Tokyo)
  • Christof Jäckle
  • Hengeler Mueller (Frankfurt)
  • Michael Mervyn Katz
  • Edward Nathan Sonnenbergs (Johannesburg)
  • Handel Lee
  • King & Wood Mallesons (Beijing)
  • Martin Lipton
  • Wachtell, Lipton, Rosen & Katz (New York)
  • Alain Maillot
  • Darrois Villey Maillot Brochier (Paris)
  • Antônio Corrêa Meyer
  • Machado, Meyer, Sendacz e Opice (São Paulo)
  • Sergio Michelsen Jaramillo
  • Brigard & Urrutia (Bogotá)
  • Zia Mody
  • AZB & Partners (Mumbai)
  • Christopher Murray
  • Osler (Toronto)
  • Francisco Antunes Maciel Müssnich
  • Barbosa, Müssnich & Aragão (Rio de Janeiro)
  • I. Berl Nadler
  • Davies Ward Phillips & Vineberg LLP (Toronto)
  • Umberto Nicodano
  • BonelliErede (Milan)
  • Brian O'Gorman
  • Arthur Cox (Dublin)
  • Robin Panovka
  • Wachtell, Lipton, Rosen & Katz (New York)
  • Sang-Yeol Park
  • Park & Partners (Seoul)
  • José Antonio Payet Puccio
  • Payet Rey Cauvi (Lima)
  • Kees Peijster
  • COFRA Holding AG (Zug)
  • Juan Martín Perrotto
  • Uría & Menéndez (Madrid/Beijing)
  • Philip Podzebenko
  • Herbert Smith Freehills (Sydney)
  • Geert Potjewijd
  • De Brauw Blackstone Westbroek (Amsterdam/Beijing)
  • Qi Adam Li
  • Jun He Law Offices (Shanghai)
  • Biörn Riese
  • Jurie Advokat AB (Sweden)
  • Mark Rigotti
  • Herbert Smith Freehills (Sydney)
  • Rafael Robles Miaja
  • Robles Miaja (Mexico City)
  • Alberto Saravalle
  • BonelliErede (Milan)
  • Maximilian Schiessl
  • Hengeler Mueller (Düsseldorf)
  • Cyril S. Shroff
  • Cyril Amarchand Mangaldas (Mumbai)
  • Shardul S. Shroff
  • Shardul Amarchand Mangaldas & Co.(New Delhi)
  • Klaus Søgaard
  • Gorrissen Federspiel (Denmark)
  • Ezekiel Solomon
  • Allens (Sydney)
  • Emanuel P. Strehle
  • Hengeler Mueller (Munich)
  • David E. Tadmor
  • Tadmor & Co. (Tel Aviv)
  • Kevin J. Thomson
  • Barrick Gold Corporation (Toronto)
  • Yu Wakae
  • Nagashima Ohno & Tsunematsu (Tokyo)
  • Wang Junfeng
  • King & Wood Mallesons (Beijing)
  • Tomasz Wardynski
  • Wardynski & Partners (Warsaw)
  • Xiao Wei
  • Jun He Law Offices (Beijing)
  • Xu Ping
  • King & Wood Mallesons (Beijing)
  • Shuji Yanase
  • OK Corporation (Tokyo)
  • Alvin Yeo
  • WongPartnership LLP (Singapore)

Founding Directors

  • William T. Allen
  • NYU Stern School of Business
  • Wachtell, Lipton, Rosen & Katz
  • Nigel P.G. Boardman
  • Slaughter and May
  • Cai Hongbin
  • Peking University Guanghua School of Management
  • Adam O. Emmerich
  • Wachtell, Lipton, Rosen & Katz
  • Robin Panovka
  • Wachtell, Lipton, Rosen & Katz
  • Peter Williamson
  • Cambridge Judge Business School
  • Franny Yao
  • Ernst & Young

Sovereign Wealth Funds

PANAMA UPDATE – New Legislation Creates Panama’s Sovereign Wealth Fund

Editors’ Note: Carlos G. Cordero G. is a senior partner at Alemán, Cordero, Galindo & Lee and a member of XBMA’s Legal Roundtable.  Alemán, Cordero, Galindo & Lee is one of Panama’s leading law firms in the offshore area as well as in representing large corporations doing business in Panama.  Mr. Cordero concentrates on Commercial Law, Banking and Administrative Law, with specialization in mergers and acquisitions, government contracts and commercial arbitration.

Executive Summary:

The product of an extensive canvasing of sovereign wealth funds from around the world and a review of their respective best practices, Panama’s new National Savings Fund provides the government with a sophisticated and transparent investment vehicle to manage the country’s surpluses.

Main Article:

Riding off of an unprecedented period of prosperity and growth, the Panamanian government recently created a National Savings Fund (the “Fund”) as a forward-looking initiative aimed at safeguarding the country against future negative shocks (e.g., natural disasters, tail risk events, economic recessions, etc.).[1]  The product of an extensive canvasing of sovereign wealth funds from around the world and a review of their respective best practices, the Fund Law seeks to provide the Panamanian government with a sophisticated and transparent investment vehicle to manage the country’s surpluses.


The Fund Law establishes the Fund’s overarching mandate, which is divided into four central directives.  The first directive requires the Fund to provide the country with a mechanism to accumulate and preserve its long-term savings.  Second, in addition to being a savings fund, the Fund is required to function as a stabilization fund, capable of deploying capital to mitigate any major negative shocks.  The third directive requires the Fund to serve as a “lender of last resort” during times of crisis and/or economic recession.  The final directive requires the Fund to assist in the management of budgetary deficits.

Assets under Management (“AUM”)

The Fund will receive its initial AUM from the government’s existing “Development Fund,” which is a trust fund that was created pursuant to Law 20 of 1995.  Subsequently, the AUM would increase from contributions received from the following sources of capital: (i) any funds which by law are assigned to the Fund; (ii) any private/public donations, grants and/or bequests; and (iii) the Rule of Accumulation (as defined herein).

The “Rule of Accumulation” requires that any and all monies received by Panama’s National Treasury – from distributions from the Panama Canal Authority (“ACP”) – in excess of the equivalent of 3.5% of the country’s nominal GDP must be deposited into the Fund.  By way of background, the ACP contributes to the National Treasury a sizable percentage of its profits (i.e., pursuant to a disbursement that is analogous to a yearly dividend payment).  In the event the ACP’s yearly contribution to the National Treasury is larger than 3.5% of nominal GDP, the excess would be diverted to the Fund.

The Rule of Accumulation will come into force in 2015.  The hurdle will initially be set at 3.5% of nominal GDP for any given year.  It may be revised once every five years beginning in 2020.  However, in order for it to be effective, the revised Rule of Accumulation must be approved at the Cabinet level as well as by the plenary session of the National Assembly.

Investment Guidelines/Investment Policy

The Fund Law establishes strict investment parameters that must be complied with during the preparation of the investment guidelines and subsequently the investment policy.   The central tenet is that the Fund may only invest in foreign issuers and/or securities.  A very limited carve-out was created for public debt instruments issued by the Panamanian government (i.e., government bonds).[2]   This limited carve-out comes into force beginning in 2015.  However, aside from this exception, the Fund must pursue a global (ex-Panama) investment strategy.

The Ministry of Economy and Finance (“MEF”) is charged with the responsibility of preparing the Fund’s investment guidelines.  These guidelines flesh out the government’s investment objectives and provide the Fund’s Board of Directors (the “BoD”) with a clear set of parameters for developing the more comprehensive investment policy.  The investment guidelines will define, among other things, specific performance benchmarks, minimum credit rating requirements for investments, asset allocation requirements, and other such investment parameters.

The BoD is charged with the responsibility of preparing the Fund’s investment policy.  This comprehensive policy sets out detailed instructions regarding the investment of the AUM.  Throughout this process, the BoD is assisted by an in-house financial advisory team known as the Technical Secretariat.  Once the investment policy has been finalized, the BoD remits it to the National Bank of Panama (“BNP”), which is responsible for executing the investment policy and managing the AUM.


In response to a common critique of other sovereign wealth funds, the Fund Law incorporates very stringent transparency requirements to ensure that the Fund’s year over year performance is a matter of public record.   Accountability would be achieved through a combination of periodic public disclosures and robust internal controls.

The BoD is required to prepare an annual report of the Fund’s performance and operations by no later than March 31st of each year.  The BoD must present this annual report to MEF and to an independent supervisory committee consisting of members of civil society.  A copy of the BoD’s annual report must also be presented to the Economy and Finance Commission of the National Assembly.

After this annual report has been vetted, MEF and the BoD must in turn prepare a detailed presentation of the Fund’s performance and operations, which must include the Fund’s audited consolidated annual financial statements (including the external auditor’s opinion letter).   The Minister of MEF and the President of the BoD must appear before the plenary session of the National Assembly to give said presentation by no later than June 30th of each year.

Additional public disclosures are required to be made by the BNP and the Technical Secretariat.  The BNP will publish the Fund’s audited consolidated annual financial statements, which must be audited by an external auditor.  In turn, the Technical Secretariat will divulge information through the Fund’s website regarding the performance of the Fund’s portfolio, the Fund’s annual budget, as well as on material decisions taken by the BoD.

The views expressed herein are solely those of the author and have not been endorsed, confirmed, or approved by XBMA or any of the editors of XBMA Forum, nor by XBMA’s founders, members, contributors, academic partners, advisory board members, or others. No inference to the contrary should be drawn.

[1] Created pursuant to Law 38 of 2012 (as amended, the “Fund Law”), which was enacted by the National Assembly (i.e., Panama’s legislative branch).

[2] The Fund may invest up to 10% of its AUM in buying Panamanian government bonds.

ITALIAN UPDATE – Formation of New Italian Fund to Protect Italian National Champions, in Reaction to the Takeover of Italy’s Parmalat by France’s Lactalis

Editors’ Note: Alberto Saravalle and Umberto Nicodano are senior partners of Bonelli Erede Pappalardo and members of XBMA’s Legal Roundtable. As two of Italy’s leading M&A practitioners, they bring an invaluable perspective to Italy’s reaction to the Parmalat takeover, which differs markedly from the UK’s reaction to the Cadbury takeover discussed in Nigel Boardman’s recent paper. This paper raises interesting questions about the defensive use of Sovereign Wealth Funds, which is sure to be a topic of discourse in the coming years.

Executive summary:

The recent acquisition of Parmalat — one of the biggest Italian listed companies — by the French dairy group Lactalis, caused a huge debate in the financial and political communities in Italy.

Lactalis’ bid was initially met with stiff Italian resistance, including encouragement of potential local “white knights,” issuance of an emergency decree to allow Parmalat to postpone its General Meeting, and debate about possibly issuing a decree granting the government new powers to block foreign bids for companies deemed strategic. But in the end, Italy decided to abandon the fight, and Lactalis managed to complete its takeover bid.

After the “thunderstorm,” the Italian government’s emphasis shifted from introducing protectionist measures to a more far-reaching goal of stimulating the Italian market for domestic mergers and acquisitions, so as to counter foreign competition. As a first step, the Ministry of Economy promoted the establishment of a new fund to invest in companies of “significant national interest”, which has been broadly defined. The initial investor in the fund is the Italian government’s Cassa Depositi e Prestiti, but the fund is also open to banks, insurance companies, and other institutional investors. It is expected that, in the near future, participation in the fund will be opened to foreign private investors as well.

The political fear of losing “national champions” to the advantage of “foreigners” is commonplace almost everywhere in the world, however, in Italy it has its own peculiar origins and reasons.

Italy’s economic base consists primarily of small and medium sized enterprises which contribute to most of the country’s national exports and GDP. Traditionally, Italy has fewer large industrial or financial groups, most of which are family owned or controlled, in comparison to other developed economies such as France, Germany, and the UK.  Over the years, this peculiar structure of the Italian economy has contributed to making Italian industrial and financial groups comparatively less dynamic than their foreign counterparts when pursuing mergers and acquisitions. In general, in the Italian business environment, “friendly” transactions tend to be more common than competitive bids where several potential buyers compete for the same target. This is partially due to the fact that, traditionally, only a few Italian companies listed on the stock exchange are actually “public companies”. Also, Italian entrepreneurs often see few incentives in embarking on M&As, as family-run businesses — even when they grow to a meaningful size — can encounter significant difficulties in managing the challenges of external acquisitions.

While our purpose here is not to discuss the effect of the peculiarities of Italian capitalism on the economy as a whole, it is fair to say that, as the Italian M&A market has increasingly opened up to foreign investors over the last couple of decades, Italian companies have been faced with the challenge of foreign competitors which, overall, have been more aggressive and dynamic.

The recent acquisition by the French dairy group Lactalis of Parmalat — one of the biggest Italian listed companies in terms of market capitalization — caused a huge debate in the financial and political communities. Parmalat was turned around after going bankrupt in 2003, thanks to the efforts of a management team that was particularly effective in restructuring the company and making it profitable again. However, that same management was considered too conservative by many, in pursuing a strategy of growth. In fact, when Lactalis moved to acquire a large stake in the company, Parmalat was sitting on a significant amount of cash, while evaluating a few possible business combinations.

Soon after Lactalis increased its stake to around 29%, a group of Italian investors, mainly led by domestic banks, tried to find a “white knight” to launch a bid to prevent Lactalis from controlling the company. Despite significant initial political support, the Italian “white knight” never materialized, mainly because of difficulties in finding a strong industrial partner interested in joining the group. Eventually, Lactalis decided to launch a tender offer, and acquired full control of Parmalat. Notwithstanding the fact that Parmalat’s Board of Directors considered the offer price insufficient, the offer succeeded owing to a lack of concrete alternatives. Lactalis’ bid spurred a significant debate in the media and in the Italian political arena as it revitalized the numerous and vociferous advocates calling for stronger protection for Italian “national champions” from foreign takeovers.

Initially, the Italian government tried to place certain hurdles for the French takeover, and actually adopted an emergency decree to allow the postponement of Parmalat’s General Meeting for a couple of months, in an attempt to gain time to allow a group of Italian companies to launch a bid before Lactalis could appoint a new Board. As any prospect of an Italian “white knight” faded away, the government also considered the possibility of issuing a decree granting it new powers to block foreign bids on companies deemed strategic. This may well have halted the French bid. The new decree was supposed to be modelled on French law No. 2005-1739 of 30 December 2005, which created an authorisation procedure for foreign investments in certain sectors of activities that could have affected public policy, public security, or national defence. This attempt was, however, soon abandoned by the Italian government, fearing the risk that these new rules could have proved to be inconsistent with EU rules on free movement of capital. Thus, after a summit between Berlusconi and Sarkozy, the Italian government decided to drop the fight against the French “invader”, at least this time.

As the thunderstorm on Parmalat ended, with the French group finally taking over Parmalat, from a political standpoint, the problem of protecting Italian “national champions” from foreign attacks remained far from resolved. However, the government policy to curb this political pressure seems to have shifted from introducing restrictive measures aimed at deterring foreigners from taking over Italian companies, to the more far-reaching goal of stimulating the market for domestic mergers and acquisitions, so as to counter foreign competition.

The latter goal is clearly more far reaching and harder to achieve in the short term. In theory, this policy is obviously more desirable and consistent with Italian obligations under European law, however, it carries two significant risks. On one hand, it may not be considered sufficient to satisfy the immediate requests of those factions within the government that believe that the country is undergoing a “looting” of its strategic assets. On the other, its implementation requires strong government commitment to pursue significant changes to the structure of Italian capitalism and, at least, a bit of time.

For the time being, however, the government seems to have chosen an intermediate solution, which should be able to deliver some immediate results and represents a step forward in fostering the domestic M&A market. The idea was borrowed from France, as this next-door neighbour is not only perceived as the most significant “threat” to domestic ownership of Italian companies, but is also considered to be a front runner when it comes to protecting its own national strategic interests from “foreign attack”. The core of this approach is the creation of a fund focused on investing in companies of “significant national interest”, which have been broadly defined by the Ministry of Economy to include companies operating in strategic sectors, such as defense, security, infrastructure, public services, transportation, energy, telecommunications, finance, and high tech, as well as companies that, regardless of their business, exceed certain thresholds in terms of revenue and number of employees. While the broadness of the above definition will not limit a fund’s target choice very much, there is the more significant limitation that will come from the fact that only the buying of minority stakes in companies that are economically and financially sound will be allowed, as European rules on state aid limit the State’s ability to invest in distressed companies.

Similarly to its French predecessor, the Italian fund has been established by enlarging the scope of activity of an entity known as “Cassa Depositi e Prestiti”, a special entity controlled by the Ministry of Economy which lends savings collected through the postal services to public entities and finance infrastructures.

Therefore, as the initial investor of the fund is the Cassa Depositi e Prestiti, which is expected to inject approximately 1 billion euro (and in the aggregate up to 4 billion euro), the fund will be off the state’s balance sheets, as its funding does not actually come from public debt. Also, it is expected that, in the near future, participation in the fund will be opened to foreign private investors as well, in an effort to encourage foreign investment in Italian companies, while keeping them in domestic hands.

Critics argue that the fund may turn out to be an instrument for politicians to exert influence on Italian businesses, somehow recreating under the cover of a new and more acceptable form, the old system of state intervention in the economy — a sort of new IRI — the Istituto per la Ricostruzione Industriale — that over the years represented the State’s long hand in business sectors ranging from the transportation to the confectionery industry.

Even though the fund has yet to start operating, the significant background circumstances relating to the newly appointed Managing Director, Mr. Maurizio Tamagnini, are noteworthy. Mr. Tamagnini headed one of the largest international investment banks in Italy, and his appointment may be regarded as a significant step towards insulating the fund from political pressure, and may even give an indication of the fund’s investment style and strategy for the very near future.

The views expressed herein are solely those of the author and have not been endorsed, confirmed or approved by XBMA or any of the editors of XBMA Forum, nor by XBMA’s founders, members, contributors, academic partners, advisory board members, or others. No inference to the contrary should be drawn.

XBMA – Quarterly Review for Q1 2011

Editor’s Note: This is an example of the type of post and content the XBMA Forum seeks to showcase.

The attached slides summarize trends in cross-border M&A and strategic investment activity throughout the first quarter of 2011.



  • Global M&A volume for Q1 2011 was US$671.8 billion, up 29.5% as compared to Q1 2010.
  • Cross-border transactions have rebounded substantially from 2009: 38% of Q1 2011 global M&A was cross-border — up slightly from 37% in 2010 and up significantly from the low of 26.8% in 2009.
  • Canada and Australia’s shares of global M&A each more than double their respective shares of world GDP, perhaps reflecting the large number of deals involving natural resources.
  • Distressed deals have exceeded US$75 billion per annum since 2009.
  • Energy M&A remains the most active among cross-border transactions – reflecting the ongoing pressure to acquire natural resources to fuel emerging economies and the churn created by political instability in the Middle East and by the widespread adoption of technological improvements in the natural gas industry – with Materials and Financials cross-border M&A in the second tier.

XBMA Quarterly Review for Q1 2011

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