News & Analysis

PAI ranked Europe’s most active fee payer

Homegrown firms operating in the European LBO market account for the bulk of fees paid to investment banks so far this year, according to figures from Thomson Financial and Freeman & Co.

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European buyout firms paid $1.87 billion (€1.55 billion) in fees to investment banks during the first nine months of this year, according to joint research by US-based consultancy Freeman & Co and data provider Thomson Financial. This represents 15.3 percent of the banks’ total European fee income.

Private equity sponsors paid $908 million in fees relating to leveraged loans, as well as $608 million for M&A advisory work and $267 million for equities capital management expertise.

The sponsor business in Europe is generating between 20 percent and 30 percent of investment banking revenues

Larry Slaughter, European financial sponsors group head, JP Morgan

French buyout giant PAI topped the chart, paying $128 million of fees on deals including the £800 million buyout of car parts business Kwik-Fit from CVC Capital Partners and Ford in June and the acquisition of chemicals business Perstorp from Industri Kapital earlier this month.

CVC was also placed near the top of the chart, as were Perimra and Apax Partners. The highest-ranking group from outside the region was the US’s Texas Pacific Group, which was placed eighth overall.

The investment bank that received the most fees was JP Morgan, which generated $160 million from private equity deals. Larry Slaughter, head of the bank’s European financial sponsors group, told Financial News that Thomson’s figures may underestimate the size of the fees generated: “The sponsor business in Europe is generating between 20 percent and 30 percent of investment banking revenues.”

The research surveyed 170 deals involving European target companies. Fee credit for consortium deals was divided equally among financial sponsors.

Last week Dealogic released figures showing that financial sponsors had generated $8.2 billion of investment banking revenues globally during the first nine months of 2005.

The figure, the highest for the first nine months of a year recorded by Dealogic so far, was almost three times the $2.8 billion generated in 2001.

The research found that Apax Partners led the financial sponsors revenue ranking with $267 million in banking fees paid, followed by Texas Pacific Group with $255 million. PAI Partners was ranked sixth with $219 million.