Banking Fees Spike At Close Of A Slow 2009

Buyout shops paid 26 percent less in investment-banking fees worldwide in 2009 than they did the previous year, reflecting the credit crunch and miserable economic conditions that haunted the past year. However, fee income paid to investment banks in the fourth quarter rebounded.

Total investment-banking fees paid by sponsors for all of 2009 fell to $3.29 billion from $4.46 billion in 2008, according to Freeman & Co. The New York-based boutique advisory firm generated the data in conjunction with Thomson Reuters, publisher of Buyouts. However, fees paid during the last quarter of 2009 jumped, and actually exceeded the fees paid during the first nine months of the year.

The top fee-paying sponsor of 2009 was The Blackstone Group, at $233.1 million. It moved up from its fifth place ranking a year earlier (when it paid $135.3 million). Kohlberg Kravis Roberts & Co. paid $182.8 million this past year, to place second, followed by Fort Worth, Texas-based TPG, which doled out $162.2 million in fees. TPG had been the top fee-paying sponsor through the first three quarters of 2009.

Two-thirds of fees paid in 2009 were for deals in the Americas, followed by the Europe, Middle East & Africa region with 27 percent. The Asia region accounted for 7 percent.

In terms of product distribution, M&A advisory accounted for 37 percent of all fees. Debt capital markets represented 25 percent of the total, followed closely by equity capital markets with 22 percent of all fees paid. Syndicated loans trailed the other categories, representing 16 percent of the total.

As for fee earners in 2009, Bank of America Merrill Lynch ranked first, receiving $335.2 million from various buyout shops. Its number one sponsor relationship was with Blackstone Group, which accounted for 15 percent of the bank’s fee earnings.

WL Ross and Bain Capital Inc. were Bank of America Merrill Lynch’s next two top sponsor relationships, representing 7 percent and 6 percent of its sponsor-related fees earned, respectively. A year earlier, Banc of America Securities LLC collected $180.1 million and Merrill Lynch received $166.1 million in fees from LBO shops.

The top fee earner in 2008 was Credit Suisse with $336.4 million. The firm obtained $244.8 million in fees this past year, ranking it fourth in 2009 behind second place JP Morgan, which earned $323.5 million; and Goldman Sachs & Co., which earned $308.6 million. Both JP Morgan and Goldman Sachs moved up one spot each in the latest year from their ranking in 2008.

For a complete list of top fee-paying sponsors and fee earners, plus information on the methodologies and assumptions used to gather the fee data, please check the accompanying tables.