Joseph Chaney and George Chen of Reuters have an interesting article on the CIC’s stingy habits; the authors call the fund a “cheapskate” for capping their M&A fees at $3 million (no matter the size of the deal).
“So while CIC has shown a willingness to dish out cash for investments, it has tended to keep a tight fist on the fees granted to banks that advise them.”
I’m not surprised by this. The CIC is perhaps the world’s largest ‘strategic’ investor in a market that has seen M&A activity collapse. As with any monopsony – one buyer, many sellers — the sellers (in this case the M&A service providers) are going to take a major pricing hit.
Yet again, we see another example of how SWFs, such as the CIC, have seen their relative, competitive position improve as a result of this financial crisis.