Bumper fees for Wall St from LBO activity

13 July 2007

Wall Street banks have posted record fee income as a result of increased activity from leveraged buyout firms (LBOs), it has been reported.

According to Freeman & Co estimates based on Thomson Financial data, LBOs paid investment banks $8.4 billion during the first half of 2007 - up 34 per cent from the year ago period.

This compares with total fees of $12.8 billion from LBO transactions over the course of 2006.

So far this year, private equity firms have announced $670 billion worth of takeovers, data from Bloomberg has revealed.

Blackstone Group and Apollo Management led the field in paying fees to investment banks, with payments of $685.4 million and $407.5 million respectively.

Commenting on the figures, Matthew Rhodes-Kropf, of Columbia University's Business School in New York, told Bloomberg: "They're paying these fees because business is very good. Paying the fees gets you better deal flow [when the sale of a company is announced]…Everyone wants to be the first call."

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