'Money available for right deals' as experts forecast strong year for Scottish corporate activity

Corporate activity is set to remain robust in 2023 with a “good pipeline of transactions” fuelling deals, legal experts have predicted, after reflecting on a strong 12 months.

Specialists at Pinsent Masons, the multinational legal heavyweight with hundreds of staff in Scotland, said they were starting the new year on the front foot after arguably the firm’s best year for transactional activity, when they have been central to deals worth billions of pounds. The stand-out deal in the last 12 months was Ithaca Energy’s £2.5 billion listing on the main London Stock Exchange in November, marking the largest UK initial public offering (IPO) of the past year, which was led by Pinsent’s Glasgow-based global head of oil and gas, Rosalie Chadwick.

Other noteworthy deals that the firm advised on included Springfield Properties’ £46 million acquisition of the housebuilding business of Mactaggart & Mickel Group, and the sale of 80 per cent stock of Glengarnock-based steelworks fabricator J&D Pierce to Swedish group Storskogen.

Barry McCaig, partner and head of corporate in Scotland at Pinsent Masons, said: “As a firm, in 2022 we experienced one of our business periods transaction-wise for many years with our corporate teams in Glasgow, Edinburgh and Aberdeen advising on deals worth billions of pounds in the oil and gas, renewables, housebuilding, industrial, commercial property, fintech and technology sectors, and there were many Scottish success stories to celebrate. Despite the political and economic turmoil that businesses of all shapes and sizes had to navigate in 2022, it was encouraging that deals continued to get over the line. That should continue into the new year and there appears to be a good pipeline of transactions scheduled for Q1 despite continuing market uncertainty and unease about interest rates.”

He added: “Although we’ve seen a bit of contraction in the debt markets, there is still a lot of liquidity in the market and money is available for the right deals but there may need to be some readjustment of sell-side expectations, with more focus on the reconfiguration of deals, and greater emphasis on earn-outs and innovative consideration structures.”

Citing the Ithaca Energy listing as a prime example of a “buy-and-build” strategy, McCaig said the IPO highlighted that institutional investors were coming back into oil and gas and that the capital markets are selectively open for “quality businesses”. He added: “The oil price may cool a little in 2023 but it will stay comparatively high compared to what we have experienced in the last five years, which will encourage deal activity.”

In the commercial property space, property partner Paul Connolly was at the centre of the largest single office transaction of 2022, advising long-term client HFD Group on the disposal of 177 Bothwell Street in Glasgow to Spanish investment group Pontegadea in a deal estimated to be worth £215m. Also in 2022, Pinsent Masons client Scottish Equity Partners made the first investment from its new fund - Fund VI - taking a significant minority share in drug discovery and design software specialist Cresset.