Banks fight for $40 million fee pot in advising on Vodafone India merger | Reuters

By Sumeet Chatterjee and Devidutta Tripathy | HONG KONG/MUMBAI HONG KONG/MUMBAI BofA Merrill Lynch, UBS (UBSG.S) and Standard Chartered (STAN.L) are among banks scrambling to win advisory roles in a potential merger involving Vodafone (VOD.L) in India, sources said, as they chase a rare big deals-related payday in the country.Britain's Vodafone Group said last month it was in talks to merge its Indian subsidiary with Idea Cellular (IDEA.NS) in an all-share deal. The merger will create India's largest mobile operator with about $12 billion in sales. The banks picked to advise on the deal could end up sharing as much as $40 million, according to Freeman Consulting

Reuters February 15, 2017 12:59:09 IST
Banks fight for $40 million fee pot in advising on Vodafone India merger
| Reuters

Banks fight for 40 million fee pot in advising on Vodafone India merger
 Reuters

By Sumeet Chatterjee and Devidutta Tripathy
| HONG KONG/MUMBAI

HONG KONG/MUMBAI BofA Merrill Lynch, UBS (UBSG.S) and Standard Chartered (STAN.L) are among banks scrambling to win advisory roles in a potential merger involving Vodafone (VOD.L) in India, sources said, as they chase a rare big deals-related payday in the country.Britain's Vodafone Group said last month it was in talks to merge its Indian subsidiary with Idea Cellular (IDEA.NS) in an all-share deal. The merger will create India's largest mobile operator with about $12 billion in sales. The banks picked to advise on the deal could end up sharing as much as $40 million, according to Freeman Consulting. That is about 10 percent of the total investment banking fee pool last year in India, where advisory fees are among the lowest when compared to other major global markets.Vodafone is in talks with Merrill Lynch, UBS and M&A boutique firm Rothschild for advisory roles, three sources with direct knowledge of the development, told Reuters. Merrill and UBS had earlier been hired by Vodafone on a planned Indian listing. Morgan Stanley (MS.N) has already been picked for the advisory role in the proposed merger, the sources added. Idea Cellular, part of India's metals to financial services Aditya Birla conglomerate, is likely to rope in StanChart and some Indian boutiques to work on the transaction, said the sources.

They said the talks for hiring the advisers have not been completed and the list could change.Morgan Stanley, StanChart, UBS and Rothschild declined to comment, while BofA Merrill Lynch, Vodafone and Idea did not respond to a request for comment. The sources declined to be named as procedures related to the merger talks are not public. In India, total fee earned from investment banking services, including M&A, equity and bonds, fell to $462.6 million in 2016, from $491 million a year ago, according to Thomson Reuters data, as equity capital market volume nearly halved.

The $40 million estimated fee pot in the potential Vodafone India deal is small when compared to the payouts from multi-billion M&A deals in advanced markets. But it is big by standards in India, where M&A advisory fees tend to be 25-50 percent lower compared to the United States, Hong Kong and Singapore, as per industry estimates.Foreign bankers in India privately grumble about the lack of a substantial number of M&A and equity underwriting deals worth more than $1 billion, making it harder for them to justify costs to their headquarters.

As a result, all large private investment banking deals see tough competition for winning advisory mandates, with global investment banks also vying with a host of local and well-connected boutique banks.About half a dozen foreign banks had been roped in last year to manage Vodafone's highly-anticipated IPO in India, which was set to raise as much as $3 billion.But with the Vodafone unit now in merger talks with listed Idea, that IPO plan is now off the table, and so is the rare opportunity to earn as much as $60 million in underwriting fees, the sources told Reuters. (Reporting by Sumeet Chatterjee and Devidutta Tripathy; Editing by Muralikumar Anantharaman)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

France, Germany to agree to NATO role against Islamic State - sources
| Reuters
World

France, Germany to agree to NATO role against Islamic State - sources | Reuters

By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States

China's Xi says navy should become world class
| Reuters
World

China's Xi says navy should become world class | Reuters

BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.