Prudential advisers in line for record $1.3bn fees

By Philip Aldrick, Banking Editor Published: 6:30AM GMT 02 March 2010

Prudential

The fees are so large that the understanding will take roughly five years to compensate for itself. Prudential is forecasting $340m of annual assets from the $35.5bn acquisition, that will cost $340m to integrate. At that rate, it will not be until 2015 that the assets cover the sum $1.64bn cost of the merger.

Prudential has not put a series on the foresee income synergies, that could broach serve benefits.

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The bulk of the fees will be paid to Credit Suisse, Prudential"s lead adviser, JP Morgan Chase and HSBC for underwriting the $21bn jot down UK rights issue. At 3pc, with a 0.5pc success fee, the banks will collect up $735m, nonetheless most of that will be distributed between sub-underwriters.

The 3.5pc price is a mixed of that charged prior to the monetary crisis, when they ranged from 1.25pc to 1.5pc.

Prudential"s underwriting is some-more costly than HSBC"s $19bn rights issue last year, when the markets were still in turmoil. HSBC paid 2.75pc and a 0.5pc success fee. Lloyds Banking Group only �380m, �144m to the Government, for the new �13.5bn rights issue and �9bn debt raising.

Prudential will compensate a serve $550m to advisers and lawyers for underwriting $5bn of hybrid debt being released to AIG as piece of the transaction, and for recommendation in derisking the transaction.