MUMBAI: India’s best quarter for stock sales in at least six years was accompanied by a slump in fees as investment banks competed to take state-owned companies public in deals that netted them almost no revenue.

Companies led by NMDC raised Rs 44,100 crore ($9.8 billion) through March 31, the most for a single quarter since Bloomberg began compiling data in 2004. While the value of sales doubled from the previous three months, fees slumped by half to Rs 2,000 crore, according to Bloomberg data.

More than half of sales were by state-owned companies that paid near-zero fees and crowded out private firms, putting pressure on banking revenues. JPMorgan Chase & Co and ICICI Securities are among underwriters predicting a rebound in charges this year as more private companies tap stock markets for capital and the government overhauls the way it pays banks.

“The private-sector IPO pipeline is very strong and those deals will result in lucrative fees for the banks,” said Jagannadham Thunuguntla, head of equity at SMC Capitals, the investment banking arm of New Delhi-based SMC Group.

At least 55 private companies are awaiting approval from the securities regulator to sell shares, according to the Sebi website.

State-owned companies that sold shares last quarter paid an average 0.05% of what they raised as fees, according to a study by SMC Capitals released March 30. That compared with 2.88% for private enterprises.

United Bank of India paid 0.56% fees for its Rs 325-crore initial public offering in February, managed by Edelweiss Capital, Enam Securities and SBI Capital Markets, according to data compiled by Bloomberg.

A similar-sized IPO by Jubilant Foodworks, which is controlled by brothers Shyam and Hari Bhartia and runs the Domino’s Pizza chain in India, netted 2.72% fees for the sole bookrunner Kotak Mahindra Capital.

A price war between investment banks seeking league-table credit isn’t necessarily in the government’s interest, the official in charge of selling state assets said last month.

“We had some cases where the banks bid at zero fees and the department was more than unhappy with that kind of approach,” Sumit Bose, secretary of the department for disinvestment, said in a March 6 interview in New Delhi.

“We are looking at tweaking the rules to ensure that we continue to make a good selection” without putting too much emphasis on fees, he said.

As part of the new regulations, “the weight will be given to technical, including their experience, what sort of experience they have had internationally, nationally,” along with how competitive fees are, Bose said.

The government will remain a dominant force in India’s equity capital market. It plans to raise $8.9 billion selling shares in state-owned companies in the fiscal through March 2011 — more than half the total value of last year’s offerings in India.

Investment banks are willing to sacrifice fees for the cachet of having been picked to manage large sales, said Indraneil Borkakoty, head of equity capital markets at Kotak Investment Banking, a unit of Kotak Mahindra.