For Advising On Mega HDFC Merger, Bankers Get Only 0.0002% Fee

HDFC's all-stock merger into HDFC Bank Ltd has about 18 advisers who got credit for a fee pool of just over $1 million, according to people familiar with the matter.

A $64 billion merger of two big Indian lenders is yielding almost no fees to financial advisers, highlighting investment bankers' struggle for profits in the country.

Housing Development Finance Corp's all-stock merger into HDFC Bank Ltd, which created one of the most valuable banks in the world, has about 18 advisers who got credit for a fee pool of just over $1 million, according to people familiar with the matter. Morgan Stanley and Bank of America Corp will take the bulk of that pool while the rest will be paid just a token amount, they said, asking not to be identified as the information is not public.

The fee pool is disproportionately small as the board and executives of the companies led by Deepak Parekh, then chairman of HDFC, drove the merger process, and the role of the advisers was limited, the people said. Many of the advisers became aware that a merger was imminent only a day before the announcement and didn't have to do any work on the deal, they said.

"India is a tough place from a fee perspective unless one can offer value-added services or is structuring complex transactions," said Pranav Haldea, managing director of Prime Database Group, which provides information on fundraisings. "This is an extremely price-conscious market, and thus, one always needs to keep costs under check."