Private equity fees double in 2006

Permira took top place in the latest fee tables produced by Thomson Financial in conjunction with Freeman & Co covering the Europe, Middle East and Africa (EMEA) region, with JP Morgan coming top as the recipient of private equity related fees. The fees relate to debt, equity, M&A and syndicated loan products.

Fees paid by the top ten private equity houses increased 48.2% from US$1.37bn in 2005 to US$2.03bn in 2006.

New entrants in the top ten private equity fee payers were Blackstone (9th place) and KKR (4th place) pushing PAI Group and Texas Pacific Group out of the top runners. The market share of fees paid by the top ten in 2006 compared to 2005 rose from 45% to 51.7% respectively. The main area of increase in fees paid to investment banks by private equity houses related to loan arranging which increased from US$734.4m in 2005 to US$1.35bn in 2006. Cinven took second place to Permira moving down from the top spot it took in 2005, while CVC Capital Partners moved from third place in 2005 to sixth place last year.

JP Morgan remained in the top slot as the main EMEA fee recipient in 2005 and 2006. Goldman Sachs remained static in fourth place for two years running while Credit Suisse lost its top ten slot to Merrill Lynch, while Citigroup fell from second spot in 2005 to eighth place in 2006. Morgan Stanley on the other hand jumped from sixth place in 2005 to second place last year.

Total fees received by the banks from the top ten houses jumped 43.8% from US$1.59bn in 2005 to US$2.28bn in 2006. JP Morgan made US$315.8m in private equity related fees with the majority (US$207.5m) of this coming from loan arranging followed by equity underwriting (US$41.7m). The market share of fees received from the top ten private equity houses by the top ten investment banks rose from 52.3% in 2005 to 58% in 2006, with the biggest area of increased fees being once again in loan arrangement jumping from US$846.3m to US$1.4bn in 2006.