JPMORGAN has lost a court dispute over fees relating to a client’s A$1.3bn (£787m) Australian takeover defence in an unusual case that sheds light on the often opaque world of investment banking fees.
An Australian court dismissed the US bank’s claim for A$50.8m in fees from Consolidated Minerals which was taken over by Ukrainian billionaire Gennadiy Bogolyubov’s Palmary Enterprises in 2008.
The takeover, a three-way battle between Palmary, commodities investment firm Pallinghurst and iron ore miner Territory Resources, drove up Consolidated’s market value by A$840m.
The case was closely followed by the investment banking industry, which keeps details of fees close to its chest and usually resolves such disputes privately.
JPMorgan, which advised Consolidated, was paid A$20m but it claimed the higher amount for retainer services, base defence fees, incentive fees and expenses for its advisory role in 2006 and 2007.
Justice David Hammerschlag said Consolidated only owed A$19.25m to the US bank, but said the two sides might want to work out the final price based on his judgment.
JPMorgan said it might appeal the decision.
“We believe there are strong grounds for appeal and we are currently assessing our response in that regard,” the bank said in a statement.
Under the agreement with Consolidated Minerals, JPMorgan was entitled to an incentive fee based on increases in the offer price. The judge backed Consolidated’s view that its fee payment should be based on the difference between Palmary’s first and final takeover offer.
City A.M. Reporter