| HONG KONG
HONG KONG Feb 8 Goldman Sachs earned the
envy of its rivals this week as the investment bank secured a
rare monopoly on the fees tied to a record stock offering by
Asia's biggest oil refiner.
The $3.1 billion share sale by Sinopec, as China
Petroleum & Chemical Corp is known, is the largest-ever equity
deal to be handled by a single bank in Asia excluding Japan,
according to Thomson Reuters data.
That means Goldman pocketed all underwriting and brokerage
fees associated with the deal, at a time when banks are
scrambling for roles in the region's equity capital market.
Investment banks knew Sinopec had been planning to raise
funds for overseas acquisitions, but it was Goldman that managed
to secure the transaction.
According to one person familiar with the matter, the
combined sum that Goldman earned from the offering was around
$40 million. Such a payout would be much larger than the average
fees tied to similar transactions in Asia.
"It's a coup, and because it comes with league table credit,
it gives them a major boost because it's on a sole basis," said
Philippe Espinasse, a former investment banker with Nomura and
UBS in Hong Kong and author of 'IPO: A Global Guide.'
Fees are usually negotiated in private, so it is very
difficult to determine the precise sum a bank earns from
handling a financial transaction. Fees can run much higher or
lower than what's expected.
The around $40 million sum that the source cited would not
fall too far from industry norms, based on current fee
Brokerage commissions between buyers and sellers typically
range from 0.5 to 1 percent of the total, or roughly $30 million
at the low end in this instance.
Goldman was also paid an estimated underwriting fee by the
issuer Sinopec of around $9.19 million, according to Thomson
Reuters/Freeman Consulting data that estimates fee values.
A spokesman for Goldman declined to comment. A Sinopec
spokeswoman did not immediately respond.
Large deals usually involve several international and local
banks, with fees spread across all participants.
By comparison, the five bookrunners handling American
International Group Inc's share selldown in AIA Group
Ltd in December received around $16 million maximum
per bank, even though that deal was more than double the size of
the Sinopec offering, according to Thomson Reuters calculations.