By Kylie MacLellan
LONDON, Sept 27 (Reuters) - The investment banks working onthe privatisation of Britain's Royal Mail postal service standto share a maximum fee pot of just under 24 million pounds($38.4 million), around a third below the typical amount for asimilar sized listing.
The government kicked off its disposal of a majority stakein Royal Mail on Friday, seeking to value the company at as muchas 3.3 billion pounds ($5.3 billion) in one of Britain's mostsignificant selloffs since the 1990s.
It will pay the banks a maximum possible overall fee of 1.2percent of the amount raised by the sale.
That is below the average of 1.6 to 2 percent paid forinitial public offerings over $1 billion in Europe, Middle Eastand Africa between 2010 and 2013, according to data from ThomsonReuters/Freeman Consulting.
Companies bringing large deals to market have greater powerto squeeze fee percentages, as the absolute sum is higher andbanks are keen to gain credit on league tables which rank theperformance of firms and are fiercely competitive.
Banks also see it as prestigious to work on such highprofile deals and are keen to form good relations withgovernments in the hope of future work.
Earlier this month the British government did not pay anyfees to the banks that handled its sale of a 6 percent stake inbailed-out lender Lloyds Banking Group.
The government plans to sell as much as 52.2 percent ofRoyal Mail in the London stock market offering, banking up to1.7 billion pounds if the sale prices at the top of its 260pence to 330 pence per share range.
If an "over-allotment option", whereby extra stock can besold if there is strong demand, is exercised both the offer sizeand amount raised could increase by 15 percent.
Goldman Sachs and UBS are running the saleand acting as joint-bookrunners along with Barclays andBank of America Merrill Lynch. Investec, Nomura and RBC Capital Markets are co-lead managers.
The seven banks will share a fee of 0.8 percent of the finaloffer size, and could also receive a discretionary fee of 0.3percent on top of this.
As joint-global coordinators, the top role in an initialpublic offering banking syndicate, Goldman Sachs and UBS willshare an extra fee of 0.1 percent.