Lundberg’s fee query

Last month Lundberg, head of corporate governance at the fund management arm of Swedish insurer Folksam, which oversees 100 billion Swedish kronor ($10.9 billion) in assets, wrote a letter to Finnish telecom Telia, which is buying Swedish rival Sonera. The missive asks Telia management to explain what the two companies got for their Skr480 million in investment banking fees. The lead bankers, Carnegie for Telia and Goldman Sachs for Sonera, were paid a standard 70-basis-point fee on the E7.3 billion ($7.2 billion) deal.

Last month Lundberg, head of corporate governance at the fund management arm of Swedish insurer Folksam, which oversees 100 billion Swedish kronor ($10.9 billion) in assets, wrote a letter to Finnish telecom Telia, which is buying Swedish rival Sonera. The missive asks Telia management to explain what the two companies got for their Skr480 million in investment banking fees. The lead bankers, Carnegie for Telia and Goldman Sachs for Sonera, were paid a standard 70-basis-point fee on the E7.3 billion ($7.2 billion) deal.

But whose standard is that? asks Lundberg. “It seems incredible, but at an hourly consulting fee of Skr2,000, the pay for this deal is equivalent to 30,000 eight-hour working days,” she calculates. “What we want to know is just how do companies measure the value they are getting for their money?”

Telia has promised to meet with Lundberg to explain the terms, but she doesn’t anticipate that any response will be adequate. “Perhaps the end result of our complaint will simply be pressure for lower fees,” Lundberg says.

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