Dentons China advises on three award-winning deals recognized by China Business Law Journal

China Business Law Journal recently published winners of "Deals of the Year 2018". Three of the deals, advised by Dentons China region, received this honor: Allianz securing approval as the first wholly foreign-owned insurance holding company in China, China Power Investment Corporation's subsidiary acquiring 33 wind farms and 13 PV power stations from a Spanish group, and China Development Bank granting financing for Hengyi Petrochemical's PMB project in Brunei.

Allianz secures approval as the first wholly foreign-owned insurance holding company in China

Categories: Foreign Investment; insurance

Dentons served as the legal counsel for Allianz.

Key Points:

With an aim of integrating its investment resources in China, Germany-based Allianz Group planned to establish a wholly-owned insurance holding company in China with an investment of RMB10 billion. The deal was one of the most notable signals that China would open up its insurance sector further to foreign investors. No foreign insurance companies had previously been permitted to own any insurance holding company in China. Therefore, the application materials and inception proposal can only be prepared with reference to cases in respect of PRC-funded insurance holding companies. For any contents not applicable to foreign-funded entities, they had to communicate and confirm with the China Banking Regulatory Commission (CBRC) upon analysis and study from the perspectives of legislative intent and regulatory orientation.

Lead attorneys:

Senior partners Chen Feng, Shi Junming, Zhao Bin, and partner Zhu Yan from Dentons' Shanghai office.

China Power Investment Corporation’s subsidiary acquiring 33 wind farms and 13 PV power stations from a Spanish group

Categories: Overseas acquisition; new energy

Dentons served as the legal counsel for acquirer China Power Investment Corporation (CPIC), while Pérez-Llorca acted for the seller Eolia.

Key Points:

Eolia is a leading independent renewable energy supplier in Spain, and the buyer is a large power generation company under CPIC’s control. The deal was enabled through the acquisition of equity in 25 onshore wind farms and 13 PV power plants in operation and another eight onshore wind farms to be developed in Spain for a price of over €1 billion.

The new-energy acquisition, involving an SOE and a cross-border purchase, required closed attention on many issues. In addition to PRC legal issues, including approvals for overseas investments, foreign-exchange regulations and financial-management requirements for SOEs, it is necessary to pay special attention to a number of complicated legal matters in Spain, including electricity tariff mechanism and electricity sales approaches, special subsidies for renewable energy, as well as those in respect of real estate, environmental protection, municipal licensing, labor, antitrust, and national security review.

Besides, the acquisition was entitled to the Specific Remuneration Regime with six years as a regulatory cycle, and varied subsidies policies would apply in different cycles. Accordingly, relevant legal risk disclosures would need to be made and pertinent solutions be developed in response to possible changes in policies.

The wind farms and PV power plants covered under the deal spanned across several autonomous regions in Spain, including Catalonia and Leon, which had different regulations, for example over issues like whether government approval was required for change of control. These variations brought additional challenges — from conducting legal due diligence, making legal risk disclosure to developing legal solutions.

Lead attorneys:

Senior partners Chen Feng and Emilia Shi, and partner Zhu Yan from Dentons' Shanghai office, as well as a team from Dentons' Madrid office

China Development Bank grants financing for Hengyi Petrochemical's PMB project in Brunei

Categories: Financing; petrochemicals

Dentons was the lead law firm for this project, and served as the legal counsel for China Development Bank (CDB). Ahmad Isa & Partners was responsible for matters relating to Bruneian law, while Hailey Ho & Partners was the Hong Kong legal counsel and Wong Alliance was the Singapore legal counsel.

Key Points:

In August 2018, the Bruneian 8 million-ton class integrated refining and petrochemical project to be constructed as a joint venture between Hengyi Petrochemical and the Bruneian government obtained a loan of not more than US$1.75 billion from a Chinese banking consortium led by CDB and Exim Bank. The project, the first phase of which involves an investment of over US$3.5 billion, is one of the first batch of the state’s key Belt and Road construction projects.

The project had taken a long time in the making, as it involved several jurisdictions where laws varied substantially, the risk mitigation measures for which were complex and the members of the banking consortium making the loan to it numerous, thus requiring coordination of the various parties’ lawyers to resolve the various jurisdictional legal issues involved in the transaction structure for the project, greatly multiplying the difficulty of the work.

Lead attorneys:

Senior partner Guo Qing, partner Wang Chunyang and associate Liu Jia from Dentons' Beijing office, with support of Bruneian, Hong Kong and Singapore legal counsels.

The winning deals have been chosen by an independent editorial team based on various factors. China Business Law Journal attaches most importance to the overall significance, complexity and innovative nature of the deals and cases, while also taking into account the deal size and broader interests.