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Commercial Awareness Update - July 2019!
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<blockquote data-quote="Angel" data-source="post: 11905" data-attributes="member: 980"><p>Hi everyone!</p><p></p><p>Welcome to this week's commercial news update. Happy reading!</p><p></p><p><strong>Commercial News Update: 10th July 2019</strong></p><p></p><p>Topics covered this week are:</p><p></p><p><span style="color: #0000b3">1. Private Equity Funds Targeting Real Estate [USER=525]@Sara Moon[/USER]</span></p><p><span style="color: #0000b3">2. Huawei’s 5G Network Concerns [USER=1550]@Sairah[/USER] </span></p><p><span style="color: #0000b3">3. Deutsche Bank’s radical restructuring [USER=1]@Jaysen[/USER]</span></p><p><span style="color: #0000b3">4. Christine Lagarde's nomination as the next ECB president [USER=980]@Angel[/USER]</span></p><p></p><p><strong><u>1. Private Equity Funds Targeting Real Estate [USER=525]@Sara Moon[/USER]</u></strong></p><p></p><p><strong>The Story</strong></p><p></p><p>The global property market seems to be going downhill. In the UK, investments in London offices, affected by the Brexit uncertainty, fell by 37% in the first half of 2019 compared to the previous year. The increasing trend to shop online coupled with the devaluation of the sterling increased retailer costs. This made it difficult for landlords to rent out their high street properties. The atmosphere in the US is similar. The Financial Times reported that every one in six retail stores on the famous shopping street Fifth Avenue is empty- with Topshop being the most recent retail brand to close all of its US stores.</p><p></p><p>However, private equity industry is seeing opportunities in this seemingly slumping real estate market and has raised $8bn in the first quarter to invest in problematic retail estates. This is double the amount raised in the last two years aggregated. Private equity firms aim to gain juicy returns by investing in cheap properties through methods such as providing debt finance or interfering with the property management to increase the value of the property.</p><p></p><p><strong>Impact on Businesses and Law Firms</strong></p><p></p><p>Private equity funds raised are not yet being spent and firms are waiting for a property slump to realise in the near future. A recent report by LaSalle Investment Management stated that by 2021, “a cyclical inflection in many real estate markets is inevitable after a long run of global growth and real estate value appreciation”. Thus, private equity deals (‘PE deals’) are likely to be flooding the market in the coming years.</p><p></p><p>PE deals are lucrative sources of revenue for law firms not least because they tend to focus on generating profit in the long-run (10 years on average). This means that law firms engaged in the deals work with the same PE firm for a long time. Lawyers involved in PE deals advise on the sale and acquisition of companies, the negotiation of the deal, and the drafting of documents. Banking lawyers also advise on financing the deal.</p><p></p><p><span style="color: #000000"></span></p><p><span style="color: #000000"><strong><u>2. Huawei’s 5G Network Concerns ([USER=1550]@Sairah[/USER])</u></strong></span></p><p><span style="color: #000000"></span></p><p><span style="color: #000000"><strong>The Story</strong></span></p><p><span style="color: #000000"></span></p><p><span style="color: #000000">Last Saturday, it was revealed that four of UK’s major telecom operators – EE, O2, Three and Vodafone are using Huawei to build their 5G networks, despite the recent US sanctions that threatened Huawei’s global supply chain. The decision to use Huawei equipment in the “non-core” elements of their networks (e.g. antennas allowing wireless communication) is a concern for the operators. Although Theresa May approved Huawei’s bid to build 5G networks in April, the UK government has yet to confirm whether Huawei will be permitted to build the wireless infrastructure. It is estimated a partial to full restriction on Huawei could result in an 18-month to 24-month delay to the widespread availability of 5G in the UK. This would deter the UK from becoming a ‘world leader in 5G’ (a key-government target), costing the economy between £4.5 to £6.8 billion.</span></p><p><span style="color: #000000"></span></p><p><span style="color: #000000"><strong>Impact on Businesses and Law Firms:</strong></span></p><p><span style="color: #000000"></span></p><p><span style="color: #000000">The involvement of Huawei in the UK’s 5G network industry has threatened relations between the UK and the US. In May, the Trump administration placed pressure on other countries to follow suit and prevent businesses from using Huawei equipment. In the UK, Trump has threatened to restrict intelligence-sharing between allies unless the government clamps down on the company<a href="https://www.thecorporatelawacademy.com/forum/file:///C:/Users/k1815831/Downloads/TCLA%20Commercial%20News%20Update%20(1).docx#_msocom_1" target="_blank">[JS1]</a> . However, Huawei has expressed preparations to take additional steps to provide the UK and other countries with assurances that the company is not involved in ‘spying claims for the Chinese government’. This will be done by signing “no-spy, no-backdoor” agreements. On Monday, China’s ambassador, Liu Xiaoming, also issued a guarantee that the UK will suffer economically if it refuses to allow Huawei to build the 5G mobile network. It could also impact trade and investment with other Chinese companies.</span></p><p><span style="color: #000000"></span></p><p><span style="color: #000000">This issue is critically important for businesses such as BT Group and Vodafone, some of Huawei’s biggest clients. Vodafone has already switched on its 5G network in six of the seven cities in the UK. It will not be easy for companies that are already using Huawei equipment to switch to another equipment provider as Huawei’s equipment already forms the infrastructure for 4G networks of many major wireless carriers in Europe and other countries. Without Huawei, there would be a ‘huge’ gap in the market, one which Huawei’s competitors such as Nokia or Ericsson would not be able fulfil quickly.</span></p></blockquote><p></p>
[QUOTE="Angel, post: 11905, member: 980"] Hi everyone! Welcome to this week's commercial news update. Happy reading! [B]Commercial News Update: 10th July 2019[/B] Topics covered this week are: [COLOR=#0000b3]1. Private Equity Funds Targeting Real Estate [USER=525]@Sara Moon[/USER] 2. Huawei’s 5G Network Concerns [USER=1550]@Sairah[/USER] 3. Deutsche Bank’s radical restructuring [USER=1]@Jaysen[/USER] 4. Christine Lagarde's nomination as the next ECB president [USER=980]@Angel[/USER][/COLOR] [B][U]1. Private Equity Funds Targeting Real Estate [USER=525]@Sara Moon[/USER][/U][/B] [B]The Story[/B] The global property market seems to be going downhill. In the UK, investments in London offices, affected by the Brexit uncertainty, fell by 37% in the first half of 2019 compared to the previous year. The increasing trend to shop online coupled with the devaluation of the sterling increased retailer costs. This made it difficult for landlords to rent out their high street properties. The atmosphere in the US is similar. The Financial Times reported that every one in six retail stores on the famous shopping street Fifth Avenue is empty- with Topshop being the most recent retail brand to close all of its US stores. However, private equity industry is seeing opportunities in this seemingly slumping real estate market and has raised $8bn in the first quarter to invest in problematic retail estates. This is double the amount raised in the last two years aggregated. Private equity firms aim to gain juicy returns by investing in cheap properties through methods such as providing debt finance or interfering with the property management to increase the value of the property. [B]Impact on Businesses and Law Firms[/B] Private equity funds raised are not yet being spent and firms are waiting for a property slump to realise in the near future. A recent report by LaSalle Investment Management stated that by 2021, “a cyclical inflection in many real estate markets is inevitable after a long run of global growth and real estate value appreciation”. Thus, private equity deals (‘PE deals’) are likely to be flooding the market in the coming years. PE deals are lucrative sources of revenue for law firms not least because they tend to focus on generating profit in the long-run (10 years on average). This means that law firms engaged in the deals work with the same PE firm for a long time. Lawyers involved in PE deals advise on the sale and acquisition of companies, the negotiation of the deal, and the drafting of documents. Banking lawyers also advise on financing the deal. [COLOR=#000000] [B][U]2. Huawei’s 5G Network Concerns ([USER=1550]@Sairah[/USER])[/U][/B] [B]The Story[/B] Last Saturday, it was revealed that four of UK’s major telecom operators – EE, O2, Three and Vodafone are using Huawei to build their 5G networks, despite the recent US sanctions that threatened Huawei’s global supply chain. The decision to use Huawei equipment in the “non-core” elements of their networks (e.g. antennas allowing wireless communication) is a concern for the operators. Although Theresa May approved Huawei’s bid to build 5G networks in April, the UK government has yet to confirm whether Huawei will be permitted to build the wireless infrastructure. It is estimated a partial to full restriction on Huawei could result in an 18-month to 24-month delay to the widespread availability of 5G in the UK. This would deter the UK from becoming a ‘world leader in 5G’ (a key-government target), costing the economy between £4.5 to £6.8 billion. [B]Impact on Businesses and Law Firms:[/B] The involvement of Huawei in the UK’s 5G network industry has threatened relations between the UK and the US. In May, the Trump administration placed pressure on other countries to follow suit and prevent businesses from using Huawei equipment. In the UK, Trump has threatened to restrict intelligence-sharing between allies unless the government clamps down on the company[URL='https://www.thecorporatelawacademy.com/forum/file:///C:/Users/k1815831/Downloads/TCLA%20Commercial%20News%20Update%20(1).docx#_msocom_1'][JS1][/URL] . However, Huawei has expressed preparations to take additional steps to provide the UK and other countries with assurances that the company is not involved in ‘spying claims for the Chinese government’. This will be done by signing “no-spy, no-backdoor” agreements. On Monday, China’s ambassador, Liu Xiaoming, also issued a guarantee that the UK will suffer economically if it refuses to allow Huawei to build the 5G mobile network. It could also impact trade and investment with other Chinese companies. This issue is critically important for businesses such as BT Group and Vodafone, some of Huawei’s biggest clients. Vodafone has already switched on its 5G network in six of the seven cities in the UK. It will not be easy for companies that are already using Huawei equipment to switch to another equipment provider as Huawei’s equipment already forms the infrastructure for 4G networks of many major wireless carriers in Europe and other countries. Without Huawei, there would be a ‘huge’ gap in the market, one which Huawei’s competitors such as Nokia or Ericsson would not be able fulfil quickly.[/COLOR] [/QUOTE]
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