Citigroup Inc. and JPMorgan Chase & Co. opted out of advising on the planned $1.4 billion Initial Public Offering (IPO) of India's SBI Funds Management Ltd. due to significantly low fees. The shareholders, State Bank of India and Amundi SA, offered fees of approximately 0.01% of the issue size, which bankers described as "rock bottom." Last year, companies on average paid 1.86% of the issue size in fees, up from 1.67% in 2024, according to LSEG data. This fee structure prompted Citi to pull out, with Jefferies Financial Group replacing it, while JPMorgan also decided against participating for similar reasons.
This trend of low fees is not new for government-linked deals in India. For instance, when the State Bank of India raised 250 billion rupees ($2.8 billion) through a share sale in July, it reportedly paid six bankers just one rupee each. Banks often accept these symbolic fees in such offerings to gain prestige, improve their league table rankings, and foster long-term relationships, even though it impacts their immediate profitability.
Despite the low advisory fees for some banks, the SBI Funds Management IPO itself proved highly successful. The $9,813-crore offering was subscribed 41.66 times overall, with the Qualified Institutional Buyers (QIB) portion seeing a subscription of 140.11 times. The IPO, which was an offer for sale by State Bank of India and Amundi India Holding, saw strong demand from major investors, including The Capital Group, BlackRock, Fidelity Investments, Goldman Sachs Asset Management, and sovereign wealth funds like Abu Dhabi Investment Authority and Singapore's GIC. It was India's first billion-dollar IPO in 2026 and served as a crucial test of investor appetite.
The shares were offered in a price band of 545 rupees to 574 rupees apiece. Ahead of its listing, the grey market premium (GMP) indicated a potential listing price of around 678 rupees per share, suggesting an 18% premium. SBI Funds Management, India's largest mutual fund house managing assets worth 12.5 lakh crore rupees, is a joint venture between SBI and Amundi, Europe's largest asset manager. The company reported a 17% year-on-year increase in total income to 4,976 crore rupees for FY26 and a 21% rise in net profit to 3,067 crore rupees.
