The nine investment banks that manage SBI Funds Management Ltd.‘s initial public offering, India‘s first billion-dollar debut this year, will receive one of the worst payouts on a large debut in the country.

The managers will split fees of 46.25 million rupees ($479,000), or 0.05% of the deal value, according to a company filing. That’s about 97.5% lower than those on the similar-sized 2025 offering of rival ICICI Prudential Asset Management Co., which paid investment banks 1.88 billion rupees ($19.5 million), or 1.8% of the offer size, according to its prospectus.

SBI Funds, India’s largest asset manager, is jointly owned by State Bank of India Ltd. and France’s Amundi SA. Its prospectus estimates total issue-related expenses at 1.13 billion rupees, or 1.16% of the offer size. Several Wall Street firms, including Citigroup Inc. and JPMorgan Chase & Co., chose not to pursue roles on the IPO because of the unusually low fees, people familiar with the matter have said.

The SBI Funds IPO follows a pattern of Indian state-owned companies paying low fees. When State Bank of India raised 250 billion rupees through a qualified institutional placement in July last year, six investment banks were paid a symbolic one rupee each, according to localmedia reports. The debut of Life Insurance Corporation Ltd. paid a total of 118 million rupees, or 0.06% of 205.6 billion rupees in proceeds, according to primedatabase.com.

Bloomberg

For “marquee transactions involving state-owned enterprises and their subsidiaries, banks are often willing to sacrifice economics for league table credit, prestige and long-term client relationships,” said Pranav Haldea, managing director, Prime Database Group. “This mandate seems to have followed a familiar pattern of aggressive fee compression.”

Read more: First Bell: SBI Funds' investors in line for 10-15% listing pop

Companies paid investment banks an average underwriting fee of 1.86% of issue size in 2025, up from 1.67% in 2024, according to LSEG data.
Despite the modest compensation, such mandates remain fiercely contested to strengthen relationships with some of the country’s largest issuers and often lead to more lucrative advisory and capital-markets assignments, according to bankers.