Kinder Morgan deal a fee bonanza for banks

(Reuters) - The investment banks advising on Kinder Morgan Inc's $21 billion purchase of El Paso Corp are set to rake in a total of $100 million to $145 million in M&A fees, according to Freeman & Co on Sunday.

Evercore Partners and Barclays Capital, which are advising Kinder Morgan on the deal, would earn $45 million to $65 million in fees, Freeman estimates show.

Morgan Stanley and Goldman Sachs, which are on El Paso's side, would split another $55 million to $80 million in fees, depending on the role they played, the estimates show.

Kinder Morgan's bid includes $9.6 billion in equity, $11.5 billion of cash and the assumption of $16.7 billion of debt for a total of $37.8 billion.

Including debt, this would be the second largest M&A transaction of the year, after AT&T Inc's $39 billion deal to buy Deutsche Telekom's T-Mobile USA.

The deal comes despite a broad slowdown since this summer in the M&A market, which has been hit by global economic uncertainty, the European debt crisis and market volatility.

It shows that companies are still willing to make big bets to cut costs and grow revenue, and banks are ready to aggressively use their balance sheet for large deals.

Kinder Morgan hopes the deal will generate $350 million a year in cost savings, or about 5 percent of the combined companies' earnings before interest taxes, depreciation and amortization.

Barclays Capital is underwriting the financing for the cash portion of the transaction, which will create the largest pipeline company in North America.

Barclays would also earn fees for its financing role. Typical underwriting fees are around 0.5 percent to 0.8 percent of the amount financed in a syndicated loan, according to Freeman.

The deal is expected to help the boutique investment bank Evercore move up one spot to No. 11 in the worldwide rankings of deal advisers, according to Thomson Reuters data.

Barclays will move to No. 7 from No. 8 spot, while Goldman and Morgan Stanley will retain the No. 1 and No. 2 positions globally, the data shows.

(Reporting by Paritosh Bansal in New York; editing by Gunna Dickson)