A spate of big deals by financial services companies in Europe could earn investment banks an estimated $332 million in advisory fees, with Goldman Sachs (GS. N) set to take the lion's share of the pot. In the past two days, Standard Life (SL. L) revealed plans to buy Aberdeen Asset Management (ADN. L) and Deutsche Bank (DBKGn. DE) said it would raise 8 billion euros ($8.48 billion) from investors, potentially generating a big payday for investment banks working on those transactions. Earlier, British bank Shawbrook Group (SHAW. L) said it had received a $1 billion bid from two private equity firms. Goldman Sachs, which secured a major role in all three deals, has pocketed the highest fees from investment banking in the first two months of 2017 and pushing usual top dog JPMorgan (JPM. N) into third place. The U.S. bank could earn between $18 and $24 million for advising Standard Life while an additional $13 to $18 million could come from its advisory work with Shawbrook, according to estimates from Freeman Consulting. Aberdeen's corporate brokers, JPMorgan and Credit Suisse (CSGN. S), which advised the Scottish asset manager on its sale, could share proceeds of between $23 and 30 million.
But the biggest boost to investment banks' fees will come from Deutsche Bank's 8 billion euro share sale which could pay advisers up to 260 million euros, according to Freeman Consulting, based on underwriting fees of between 2 and 3.25 percent of the total raised. Goldman Sachs is one of eight banks underwriting Deutsche's the rights issue alongside Credit Suisse, Barclays (BARC. L), BNP Paribas (BNPP. PA), Commerzbank (CBKG. DE), HSBC (HSBA. L), Morgan Stanley (MS. N) and UniCredit (CRDI. MI). The German bank will also pay more fees to a pool of banks underwriting the public offering of part of its asset management business, estimated at between 2.75 and 3.5 percent of the amount of money raised, according to Freeman.
Appetite for big takeovers and fundraising deals in the financial services industry remains strong even if some have run up against regulatory and political hurdles. The long-awaited 29 billion euro merger of the London Stock Exchange (LSE. L) with German rival Deutsche Boerse (DB1Gn. DE) was expected to pay a combined $184 million in advisory fees. But this deal is hanging by a thread after LSE turned down demands from European antitrust regulators to sell a trading platform in Italy. Since the start of the year, nearly $10 billion of financial services takeover deals have been announced in Europe, the Middle East and Africa (EMEA), with Britain accounting for almost half of the value, according to Thomson Reuters data.
Equity capital markets deals across EMEA have almost doubled since the start of the year, with $36.7 billion of equity fundraisings since January compared with $21.3 billion in the same period last year. Italy's biggest bank UniCredit, which tapped investors in February, is expected to pay about $450 million to Goldman Sachs and other banks who worked on its 13 billion euro share sale, according to Freeman Consulting.
The Dow was on track to break its 10-day record-setting streak on Friday, as investors turned cautious after recent comments from Trump administration suggested that pro-growth policies may take longer to be implemented. Wall Street is trading at record levels since the election of Donald Trump as U.S. president, spurred by his promises of tax reforms, reduced regulations and increased infrastructure spending. However, with Trump giving scant detail on his plans – including one on Thursday to bring millions of jobs back to the United States – markets have traded in a tight range. The benchmark S&P 500 index has not registered a move of at least 1 percent in either direction since Dec. 7."There is an expectation that the tax cuts promised by the new administration may not be as large or as early as expected," said Mohannad Aama, managing director at Beam Capital Management in New York."Investors had priced in the most rosy outlook for the market under the Trump administrations and now their reality is slowly changing as they realize a lot of the new policies will take time and maybe the market has run up too fast too soon."U.S. Treasury Secretary Steven Mnuchin said on Thursday that any policy steps would probably have only a limited impact this year. Investor will likely get more clarity on Trump's plan on Tuesday, when he addresses a joint session of Congress.
Still, the Dow and the S&P were on track to end the week higher, while the Nasdaq was set to register a loss. At 12:36 p.m. ET (1736 GMT) the Dow Jones industrial average . DJI was down 35.23 points, or 0.17 percent, at 20,775.09. The S&P 500 . SPX was down 3.75 points, or 0.15 percent, at 2,360.06. The Nasdaq Composite . IXIC was down 9.73 points, or 0.17 percent, at 5,825.78.
Seven of the 11 major S&P sectors were higher, with the utilities index's . SPLRCU 1.07 percent rise leading the gainers. Defensive sectors such as the telecommunications . SPLRCL and consumer discretionary . SPLRCD also gained. The financial sector . SPSY, which is the best performing index since the election, fell 1.1 percent. Oil prices were down about 1 percent after U.S. crude inventories rose for a seventh week, showing the market is still struggling to ease oversupply. [O/R]
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