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When the wire transfers hit, there will be close to a quarter billion dollars of fees paid to Canadian investment banks from three huge share sales in the past week.
Filings show Bank of Nova Scotia's sale of 82 million shares of CI Financial worth $2.6-billion will generate $105-million of fees (assuming a full sale of what's known as the over-allotment, or extra shares).
Element Financial Corp.'s three-part sale of securities to raise $1.25-billion will result in $48-million in fees, which could rise to $55-million if the over-allotment goes ahead.
And PrairieSky Royalty Ltd.'s initial public offering last week will produce $83.7-million of fees, after the company said Tuesday that the over-allotment had been sold and the total sale was now $1.7-billion.
Add those fees up, assuming the overallotments are sold, and the fee tally is $244-million. That's before counting all the other deals that were done last week, which was the busiest week for stock underwriting in five years. Back of the envelope math on those suggests that the total rises past $300-million.
The biggest beneficiary may be GMP Securities, the one name that arises as a lead on the Scotia-CI sale and every tranche of the Element financing. The so-called lead underwriters get the most stock to sell, and collect the most fees. GMP was also a syndicate member, but not a lead, in the PrairieSky deal.
Other banks that will see big paydays from being involved in two of the three big deals are TD Securities and Canadian Imperial Bank of Commerce. They were co-leads on the PrairieSky and Element transactions.
The banks collect the fees for their role in buying the stock and reselling it to investors. They get paid for their advice on pricing and structuring a deal, their ability to place the stock with investors, and for taking the risk of what's known as a "bought deal." The banks in a bought deal put up the money for the stock, and take the risk that there won't be buyers in the open market. (Except when they don't, as in the case of one sale last week.)