Currying favour

India fees: Investment bankers should head to India if they want to make a fast buck. Literally. Goldman Sachs, for example, will share a mere $18 in fees after winning a competitive pitch to sell $1.8 billion-worth of government-owned stock in Power Grid Corporation of India. Rivals aren't faring much better. Wall Street must be counting on their benevolence landing them considerably more lucrative business in the fast-growing country as a result. But the pay-off for these loss-leaders may be some ways off.

After all, Power Grid is itself a repeat issuer – the government sold its first block of shares when the company went public three years ago. Sure, the staggeringly low fee of 10 millionth of a per cent is the lowest yet by far. Rivals who managed share offerings for Coal India and Manganese Ore earlier this year, for example, managed to eke out 100,000th of a per cent in payment for their efforts.

Bankers in India must be looking across the ocean in envy at what must seem like bountiful fees for arranging government deals.

Banco do Brasil paid underwriters 50 basis points while the advisers taking General Motors public, perhaps this fall, will share a 0.75 per cent fee.

The GM deal, especially, looks low for a market where the average IPO fee is around 6 percent and where even the largest deal ever, Visa’s $19.6 billion 2008 debut, doled out 2.8 per cent. But GM’s record-low payment for the United States is pretty much the average in India – and that looks to be heading lower still in a market where as many as 20 banks compete for honors. For now at least, all bankers have to look forward to is some league-table bragging rights. But that doesn't pay the bills.