Several major Wall Street banks decided not to advise on the upcoming $1.4 billion IPO of SBI Funds Management because the fees offered were extremely low.
Why the banks walked away
Citigroup, which was originally slated to be a mandated adviser, pulled out, saying the fee was too small. JPMorgan Chase made a similar choice after initially pitching for the deal.
Just how low were the fees?
- Shareholders such as State Bank of India and Amundi offered about 0.01% of the total issue size as a fee.
- Last year, companies typically paid around 1.86% of the issue size in advisory fees.
Bankers described the offered fee as “rock bottom.”
Who is handling the IPO now?
- Indian banks and advisors: Kotak Mahindra Capital, Axis Bank, SBI Capital Markets, Motilal Oswal Investment Advisors, ICICI Securities, JM Financial.
- International banks still involved: Jefferies (replaced Citi), HSBC, Bank of America.
Low‑fee deals are common in government‑linked projects
In past transactions, banks have accepted symbolic fees to gain prestige and future business. For example, when State Bank raised 250 billion rupees in a share sale, each of six banks received just one rupee.
About the SBI Funds IPO
SBI Funds Management is jointly owned by State Bank of India and Amundi. The partners plan to sell about 10% of the company, valuing it at roughly $14 billion.
India’s hot IPO market
India was among the busiest markets for new listings in 2025, with companies raising around $22 billion, a new record.
Disclaimer
Remember, this is perspective, not a prediction. Do your own research and consider your own risk tolerance before making any investment decisions.