Blackstone fees boost bank profits

For the second year running Blackstone was the biggest single generator of financial sponsor-driven revenue for investment banks, paying $646 million in fees last year.

The Blackstone Group last year paid the largest amount of fees to investment banks for the second year running, despite the fact that the firm paid 8 percent less than it did in 2006, according to data recently released by Dealogic.

Blackstone in 2007 paid fees totaling $646 million (€440 million), while Goldman Sachs Capital Partners was the second-largest fee payer at $617 million. TPG ranked third at $537 million, Kohlberg Kravis Roberts ranked fourth at $521 million and Warburg Pincus ranked fifth at $373 million.

Fees paid by financial sponsors last year totaled $15.6 billion, or 2 percent less than the previous year, due largely to a sharp drop in activity during the second half of the year as a result of the credit crunch.

Goldman Sachs was for the first time the world’s largest recipient of private equity fees, bringing in 14 percent of all Blackstone fees, and total financial sponsor fee revenue of $1.5 billion. This gave the bank total market share of 9.7 percent, up from 7.9 percent in 2006, and displaced JPMorgan from the top spot.

JPMorgan captured 8.5 percent of the buyout fee market last year, the same as 2006, netting $1.3 billion, while Credit Suisse collected fees totaling $1.12 billion, capturing 7.2 percent of the market, up from 6.9 percent the previous year. Deutsche Bank ranked fourth with fee revenues totaling $988 million while Lehman Brothers ranked fifth with $860 million.

Dealogic also found that announced financial sponsor buyouts, including add-on acquisitions, hit a new record of $796.1 billion last year, up 9 percent from $729.9 billion in 2006. This new record was achieved despite a 62 percent volume drop in activity in the second half of the year, Dealogic said, due largely to seven deals agreed earlier in the year that were worth more than $10 billion each.

Kohlberg Kravis Roberts agreed the largest number, value-wise, of buyouts, with 41 deals worth $119.3 billion. It was followed by:
• GS Capital Partners with 44 deals worth $94.1 billion;
• TPG with 29 deals valued at $85.4 billion;
• Madison Dearborn Partners with 14 deals worth $74 billion;
• Providence Equity Partners with 27 deals worth $69.7 billion;
• Teachers Private Capital with 5 deals worth $52.5 billion;
• Blackstone with 41 deals valued at $50.5 billion;
• The Carlyle Group with 52 deals worth $37.8 billion;
• Bain Capital Partners with 31 deals worth $26.1 billion;
• and Clayton Dubilier & Rice with 10 deals worth $25.3 billion.