Who would have thought that waste would sustain investment banking in Paris? This is what Veolia’s hostile bid for the Suez water division has done. Some 16 banks are working on the operation, with utility-type returns that, however, could improve.
A priori, the business is small: Veolia offers 2.9 billion for a stake in its dam, owned by Engie, of which France has 24%. But it is the initial salvo of a possible purchase of Suez (10,000 million). All three have hired consiglieri, leaving the excluded looking for alternatives, such as infrastructure funds or private equity.
The assailant is flanked by two boutiques, Messier Maris and Perella Weinberg, in addition to Citi, HSBC, Bank of America, Morgan Stanley and Credit Agricole. Suez has ducked like a scared cat, hiring the local Rothschild and Société Générale, the American brute force of JP Morgan and Goldman Sachs, and the Bredin Prat law firm. Engie has Parisian league stalwarts Lazard and BNP, plus Credit Suisse. Barclays advises the Government.
So many mouths to feed doesn’t necessarily translate into a feast. Assuming the fees are 1% of the offer at best, Veolia’s seven advisers could earn about $ 4 million each: enough for new Hermès ties but not for a new wardrobe at Cifonelli. Also, there is a list of attorneys to pay, such as Cleary Gottlieb. And Deloitte, who works on antitrust matters.
The sector is in need. Strong recruitment from boutiques like Centerview (whose new partner Matthieu Pigasse will advise Engie) was based on Brexit relocations and further stock market exclusions. But the pandemic has cut the volume of local mergers in half. That could change if Veolia’s offering is merely a snack of a full Suez purchase. It may be a lousy year, and sewage an unglamorous business, but Paris bankers will still look stylish when it’s over.