China Investment Corp., the $300-billion sovereign wealth fund, is expected to generate a lot of dealmaking activity in Canada in coming years, but bankers may not make as much money from the behemoth's buying as they might think.
According to Reuters, CIC is awfully thrifty when it comes to handing out the fees, and in a year when deals are still relatively scarce, the fund has the pricing power to take a stand. According to some bankers, Reuters said, CIC caps payouts at $3-million no matter how big a deal is.
So far, CIC's most visible foray into Canada has been its $1.5-billion purchase of a stake in Teck Resources Corp. Scotia Capital was the financial adviser on that deal, and Torys provided the legal help. By Reuters math, traditional fee structures would put the fees to bankers at around $47-million, or a 2 per cent fee. That's a long way from $3-million.
Other advisers that CIC has used include JP Morgan and Morgan Stanley.