Thursday 22 August 2019

Record year for dealmakers as fees rocket

Albert Manifold, the CRH chief executive
Albert Manifold, the CRH chief executive

Jason Corcoran

Ireland's biggest-ever buyout deal cost CRH €200m to pay off investment bankers from America and Switzerland, as well as other transaction costs. Bankers advising on Irish merger and acquisition deals have earned record fees over the last year.

Dealmakers from Bank of America Merrill Lynch, JP Morgan Chase, UBS, Davy, Goodbody earned a bumper payout for helping the Irish company perform due diligence on Lafarge-Holcim and to complete the €6.5bn deal.

This year is set to be a record for fees earned by bankers from Irish mergers and acquisitions, according to data from New York-based consultancy Freeman & Co.

Rainmakers have so far earned a whopping $313m, almost double the $159 million for the same period last year. The biggest year previously for fees earned by bankers was 2013 when bankers pulled in $206m. During the peak of the Celtic Tiger from 2006 to 2007, the banks were paid $198 million and $180m.

Goldman Sachs leads the pack this year with $92m, or 32pc of the pie. US rivals JP Morgan and Morgan were second and third, earning $32m and $23m, respectively. Barclays is fourth with $18m while Bank of America Merrill Lynch trails in fifth with $17m.

It is thought that major tax inversion deals have also pushed tax and M&A fees at Ireland's legal firms to record levels.

CRH disclosed the substantial transaction costs in an earnings call last week. The company said that the recently purchased assets from Holcim-Lafarge, which include businesses in Europe, Canada, Brazil and the Philippines, were performing in line with its expectations and were expected to contribute about €340m to its full-year results.

Jeffrey Nassof, analyst with New York-based M&A consulting firm Freeman & Co, estimated that bankers representing CRH would have earned about €75m from the acquisition of the Holcim-Lafarge assets. The pot of €75m fees would have been paid for advisory services, a bridging loan, a share sale and bond sale.

CRH chief executive Albert Manifold said in August that the deal brought the company a step closer "to achieving our aim of becoming the world's leading building materials company".

Sunday Indo Business

Also in Business