Citi, JPMorgan opt out of $1.4B SBI Mutual Fund IPO due to low fees, highlighting growing tension between global investment banks and issuers over underwriting compensation in India’s booming IPO market. The move underscores how even large, high-profile listings are facing pushback from top-tier bankers when economics do not stack up.
The decision has sparked debate about fee structures, competition among banks, and sustainability of ultra-low underwriting fees in mega public offerings.
What Happened With the SBI Mutual Fund IPO
The proposed IPO of SBI Mutual Fund is expected to raise around $1.4 billion, making it one of the largest asset management listings in India.
However, global banking giants Citigroup and JPMorgan Chase reportedly chose not to participate as bookrunners after discussions over fees failed to meet their expectations.
Why Citi and JPMorgan Walked Away
The main reason Citi, JPMorgan opt out of $1.4B SBI Mutual Fund IPO due to low fees is the sharp compression in underwriting margins.
Key concerns included:
- Fees significantly lower than global IPO benchmarks
- High workload and regulatory complexity
- Limited upside despite the large deal size
For global banks, India IPO mandates often require extensive local coordination, compliance work, and investor outreach—making fee levels a critical factor.
India IPO Fees Under Pressure
India’s IPO market is known for aggressive fee negotiations, especially for large, marquee issuers.
In recent years:
- Issuers have pushed fees down due to strong demand
- Domestic banks and brokerages have accepted thinner margins
- Global banks have become more selective
This environment explains why Citi, JPMorgan opt out of $1.4B SBI Mutual Fund IPO due to low fees, even though the deal is sizable and high-profile.
What This Means for SBI Mutual Fund
Despite the exit of two global banks, the IPO is expected to move forward with other domestic and international bookrunners.
SBI Mutual Fund benefits from:
- Strong brand trust linked to State Bank of India
- Large and stable AUM base
- Growing retail participation in mutual funds
Market participants believe investor demand is unlikely to be affected by the banker lineup.
Impact on Global Banks’ India Strategy
The decision signals a shift in how global banks approach Indian capital markets.
Analysts say:
- Banks may prioritise fewer, higher-margin deals
- Participation will depend on economics, not just prestige
- Fee discipline could return in future negotiations
The move could encourage issuers to reassess whether ultra-low fees are sustainable for complex transactions.
Broader Implications for India’s IPO Market
As Citi, JPMorgan opt out of $1.4B SBI Mutual Fund IPO due to low fees, the episode highlights a structural issue:
- India offers high deal volumes but low fees
- Global banks face pressure on profitability
- Domestic players gain a larger share of mandates
This could gradually reshape the competitive landscape of IPO banking in India.
What Happens Next
The SBI Mutual Fund IPO timeline and structure are expected to remain unchanged. However, future large issuers may face tougher conversations with global banks on:
- Fee expectations
- Role clarity
- Long-term relationships
Bankers say a balance will be needed to keep top-tier global expertise engaged.
Conclusion
The fact that Citi, JPMorgan opt out of $1.4B SBI Mutual Fund IPO due to low fees sends a clear message to India’s capital markets. While deal volumes remain strong, underwriting economics are reaching a tipping point. How issuers and banks resolve this tension could shape the future of big-ticket IPOs in one of the world’s fastest-growing markets.
