Bharti-MTN collapse slashes fees for banks

THE collapse of talks between India’s Bharti Airtel and South Africa’s MTN Group means banks have lost out on an estimated US$50 million-plus (N$377 million) of mergers and acquisitions (M&A) fees.

Bank of America Merrill Lynch and Deutsche Bank, which were advising MTN, were on course to share US$34 million in fees, according to estimates for Thomson Reuters compiled by Freeman & Co, a merger consultancy.Standard Chartered and Barclays, which advised Bharti, and Goldman Sachs, which worked for the company’s shareholder SingTel, were on course to share US$25 million. Instead, the banks may get a retainer payment of just five per cent to 10 per cent of the success fees, Freeman says.Talks to create the world’s third-largest mobile operator collapsed for the second time in just over a year on Wednesday. The deal, based on a complex minority share swap, would have been one of 2009’s biggest M&A transactions.Bharti, India’s largest mobile operator, blamed the South African government for the latest breakdown in a deal which faced close scrutiny from regulators and politicians.The tie-up’s collapse harks back to last year, when the acute phase of the financial crisis pushed deal cancellations to a record, of close to US$800 billion.The failure of more than 1 100 deals deprived banks of an estimated US$815 million-plus in fees.- Nampa-Reuters