Q&A – Offshore lawyer Neil McDonald on Walkers' fast growing Israel-focused practice

Offshore law firm Walkers has a long history of working with clients in Israel, advising on matters of Cayman, BVI, Bermuda, Jersey, Guernsey and Irish law. Partner, Neil McDonald, from Walkers' top-tier ranked London office leads the firm's Israel group, advising clients on Corporate, Investment Funds, Finance and Regulatory matters.

In this Q&A, Neil discusses the trends in instructions emanating from Israel since 2019, as well as more recent trends in the context of Walkers' Israel client base.

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What are the key trends involving a connection between clients in Israel and offshore law?

The key overall trend is that we are doing more work across the board, and more complex work of a higher value. Despite all of the restrictions and disruption caused by the Covid-19 pandemic, we experienced a notable increase in instructions from Israeli clients during 2021 and this financial year we are poised to exceed last year's exciting growth.

Over the past three years, we have worked with Israeli clients on over 150 transactions, and we are currently working on numerous matters with Israeli clients across the firm, encompassing a broad range of industries and sectors.

In my role as a Corporate and Finance lawyer advising on BVI, Cayman and Bermuda law, increased levels of M&A has undoubtedly been the key work trend – which has, in turn, spurred acquisition finance activity, as clients have utilised debt financing to take advantage of investment opportunities. However, I've also seen a substantial uptick in fintech and digital assets matters, driven by Israel's dynamic tech. sector and crypto innovation, where our regulatory and corporate advisory expertise can be brought to bear. Finally, the economic effects of the pandemic have also resulted in increased levels of restructuring and corporate recovery work, with us being regularly called upon to formulate structures and techniques to assist distressed companies to refinance or restructure themselves.

What examples are there of recent matters that Walkers has worked on with an Israel connection?

We have acted on a significant number of matters across a range of practice areas for Israeli clients over the past three years. However, one recent transaction of particular note was the ground-breaking launch of Group 11's US$200 million Fund V, the first venture capital fund to join trading on the TASE UP platform, where we acted as Cayman counsel to Group 11 working alongside Israeli lead counsel.

TASE UP is an innovative electronic trading platform, available to institutional and accredited Israeli investors, that allows high-tech companies, venture capital funds, credit funds, and real estate funds to trade on the Tel Aviv Stock Exchange, while remaining private.

Group 11 is a Silicon Valley-based venture capital firm founded by Dovi Frances in 2011 that invests in revolutionary technology companies from the financial services industry, and approximately 70% of its portfolio is Israeli-related with Israeli founders at the helm and R&D presence in Israel. For many years, industry has been exploring ways to bring investor liquidity to PE/VC structures, and it was brilliant for us to be a part of the story as Group 11 was able to utilise a Cayman structure to achieve just that with such an innovative product.

In general, what kind of legal work do offshore lawyers see that touches on Israel?

Walkers has a long-standing relationship with its Israeli clients and has been active in Israel since the firm's inception in the 1960s. We are instructed on a broad variety of matters with an Israel nexus covering various product areas, including Corporate, Finance, Private Equity, Regulatory, Wealth Structuring, Insolvency and Dispute Resolution. However, having reviewed the data, just over half of the instructions that we have seen since 2019 have touched on Investment Funds in some shape or form, and that is consistent with my recent experience.

Which offshore jurisdictions are favoured by Israeli lawyers and clients?

Again having reviewed the data from 2019 onwards, around half of our instructions involve Cayman law and those Cayman matters tend to involve Investment Funds, which is unsurprising as the Cayman Islands is a leading jurisdiction for Investment Funds globally and continues to be the touchstone domicile for start-up and emerging funds.

However, we also undertake substantial numbers of BVI law instructions for our Israeli clients, in particular involving corporate structuring, 'outbound' real estate investment and digital assets matters, as well as regularly advising on Bermuda, Jersey and Guernsey law matters.

What is the general outlook for 2022 from the offshore world?

We anticipate a busy remainder of 2022 and are recruiting heavily into all of our offices, including in London where I am based. A combination of the ending of some Covid-related restrictions and the significant amount of "dry powder" capital held by PE houses suggests that the M&A market, in particular, will continue to be a busy one. There is also a significant amount of regulatory change - especially in respect of fintech and digital assets – happening across all of our jurisdictions, which we expect to be relevant to many of our Israeli clients.

Are there any key developments at Walkers that are relevant to Israeli clients?

The most recent key development in our London office was the addition of Bermuda law capability, allowing us to provide time-zone sensitive Bermuda, as well as Cayman and BVI, law support to our clients in Israel. This move followed the successful large-scale roll out of Bermuda law services in our Hong Kong and Singapore offices, with our Bermuda, Hong Kong, London and Singapore offices now forming an international powerhouse offering a seamless, global Bermuda law service to our clients.

A further key development, reflecting our continued growth, is our ongoing recruitment activity. We now number more than 1,000 members of staff across ten offices globally covering six laws - Cayman, BVI, Bermuda, Jersey, Guernsey and Irish law; and we anticipate that the strong platform we have built through our critical mass of talented lawyers, strong brand profile and consistent engagement with the market will stand us in good stead to continue providing our Israeli clients with the trusted, best-in-class advice and experienced, committed and responsive service they require.

Neil will be visiting Tel Aviv in the coming months for client meetings – please get in touch if you would like to arrange a meeting.