£100M fees bonanza for bankers in funds merger
The £11bn merger of Standard Life and Aberdeen Asset Management has triggered a fees bonanza of nearly £100m for bankers, lawyers and other advisers.
The two Scottish companies plan to join forces to create one of the largest fund managers in the world, with £660bn of savers’ cash on its
books. About 800 of the 9,000 jobs at the combined group are set to be axed.
But the deal, which looks likely to be approved by shareholders, has also generated a windfall for advisers who will scoop a total of £97m, according to documents published last night.
Standard Life is on the hook for £60.8m, with £26m going to bankers at Goldman Sachs and Fenchurch Advisory Partners.
Goldman high-flyer Mark Sorrell – the son of advertising guru Sir Martin Sorrell, the £495m chief executive of WPP – is among those who worked on the deal and will share the windfall.
Standard Life is also paying £8.1m for legal advice, including from Slaughter and May, £1.9m to accountants and even £1.8m on public relations.
Aberdeen is paying its bankers and brokers, including JP Morgan Cazenove, Credit Suisse and Securities, £27.5m while its lawyers are getting £7.5m. The firm is on the hook for a further £500,000 for PR advice and £400,000 for its accountants.
The documents also revealed that the combined company will be called Standard Life Aberdeen and will be headquartered in Scotland with offices around the world.
Standard Life chairman Sir Gerry Grimstone, 67, will retain the position in the combined group with his counterpart at Aberdeen, 63-year-old Simon Troughton, becoming deputy chairman.
Keith Skeoch, 60, and 61-year- old Martin Gilbert, chief executives of Standard Life and Aberdeen respectively, will become co-chief executives – a power- sharing arrangement that has raised eyebrows among investors worried it will end in disaster.
Bosses expect to save £200m a year from combining office functions in the merger. But they believe there will be one-off costs of £320m. Pay details for Skeoch and Gilbert from 2018 are yet to be revealed, and will be voted on by shareholders at Standard Life’s annual meeting next year.
Gilbert and his family own 183,865 shares in Aberdeen, which will be worth £527,692 when they are converted into Standard Life stock after the deal completes. he will also get up to 3.2m shares if he hits targets under various bonus schemes, worth another £9.1m. Skeoch’s family has 2.3m shares in Standard Life, which were worth £8.9m at the time of the deal, along with up to 3.2m more worth another £12.3m if he hits targets. Star fund managers are expected to share a £35m bonus pot if the deal goes ahead as the firms battle to stop them leaving. This cash will be used to keep big-name staff on board, with payouts due when the deal completes. But not all managers will get the cash and it remains unclear who will lose out.