A report in the Sydney Morning Herald this morning confirms that the $11.1 billion Qantas buy-out will richly reward advisers and some investors with its fee structure.
Macquarie Bank, which is to invest $515 million for a 14.7% equity stake in the bid vehicle, Airline Partners Australia, is likely to get $400 million in fees for putting the deal together, which means it will have only 13% of the capital it has invested actually at risk in the deal.
Equity and debt providers as well as legal and accounting advisers will get probably another $100 million in fees for their part in the transaction.
Another investor, Allco Equity Partners, which will take a 35% voting interest, will not wait until APA’s eventual sell-out to get fees, because as a listed investment house, it will pay considerable fees to its manager, Allco Equity Partners Management, which while it has adjusted its fee structure downwards for the Qantas deal, for the initial transaction, it will receive a fee of half a per cent of enterprise value, which given its 27% economic interest, that amounts to about $4.7 million.
In addition, every year, AEPM will receive a 1% management fee on the $682 million AEQ is raising to join the deal, which will amount to another $6.8 million a year.
Also, the ownership structure of AEPM is to change with the deal, with the Liberman family, initial investors in AEP, selling their 37% stake in the business and AEPM chief Roger Wooley, selling his 13%, leaving Allco Finance Group and AEP managing director Peter Yates as owners of AEPM.
Allco Equity will invest $980 million in APA along with stablemate Allco Finance Group, which will put in another $300 million, so collectively they will represent the biggest holding, with a 35% economic interest and a 46% voting interest.
Report by The Mole
