$64 billion HDFC merger deal but bankers get mere 0.0002 per cent in fees!
The merger valued at $64 billion, is generating minimal fees for the financial advisers, underscoring the challenges faced by investment bankers in India in terms of profitability.
The merger between Housing Development Finance Corp. (HDFC) and HDFC Bank Ltd, resulting in the creation of one of the world's most valuable banks, involved approximately 18 advisers who received credit for a fee pool slightly exceeding $1 million. However, the merger, valued at $64 billion, is generating minimal fees for the financial advisers, underscoring the challenges faced by investment bankers in India in terms of profitability.
The merger of Housing Development Finance Corp. (HDFC) into HDFC Bank Ltd, creating one of the world's most valuable banks, resulted in financial advisers receiving a fee pool of just over $1 million, with Morgan Stanley and Bank of America Corp. receiving the majority. The fee pool was relatively small due to the limited involvement of advisers, as the merger process was primarily driven by the board and executives of the companies. Many advisers were informed about the merger shortly before the announcement and did not have significant roles in the deal.
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The challenges faced by investment banks in India to generate fees align with the global struggles in the industry, leading to job cuts. However, the impact on advisory units in India was relatively limited due to already small team sizes and cost control measures.
On Tuesday, shares of the company surged by 0.86 per cent to trade at Rs 1,734.40. Additionally, on Monday, the scrip traded at its 52-week high of Rs 1,757.80.
Investors should keep a close eye on this trending stock.