Investment banking fees in India tumbled by more than a third in 2008 following a sharp fall in share sales in the worst year ever for Indian stocks, and bankers expect IPOs to return only by the second half of this year.

Most saw mergers and acquisitions as the best opportunity in 2009 as firms' try to shed non-core assets or sell stake in units to raise cash and feed their main lines of business.

"To me, 2009 will be a bigger year for M&A. Clearly this is the time for strategic players to make their entry. Valuations are attractive and India is a market not many can miss," said Falguni Nayar, managing director at Kotak Mahindra Capital Co.

Investment banking fees fell 36.4 percent to $757.7 million from the record $1.2 billion registered in 2007, with share sales and debt offerings falling. Fees from M&As nudged up, Thomson Reuters data showed.

Kotak Mahindra stands second in the Thomson Reuters league table with estimated fees of $34.32 million.

"For equity issues, the secondary market has to be stable for a while before activity can pick up," she said.

Fees from share sales fell 82 percent in 2008, the data showed, as the IPO market vanished after investor aversion to equity heightened as the benchmark index fell 54.2 percent on year.

Equity issuances fell 80.1 percent to $6.1 billion in 2008 and firms such as UTI Asset Management, ICICI Securities, a unit of No.2 lender ICICI Bank, were among 17 firms that shelved or deferred IPOs worth $10.4 billion, data showed.

And bankers said this market, among the most lucrative for banks' in 2007 when a record $8.2 billion was raised through IPOs, would remain muted for a large part of this year.

UBS India head Manisha Girotra said that local capital market action would not pick up until the second half of the year and it was likely that not a single IPO would list in the first six months.

But M&A fees managed to inch up about 3 percent, helped by large deals such as Tata Motors' acquisition of Jaguar and Land Rover brands from Ford for $2.3 billion and Japan's Daiichi Sankyo $4.2 billion buyout of Indian drug maker Ranbaxy Laboratories.

Top lender State Bank of India tops the league table, raking in $50.8 million in fees in 2008 as it dominated the debt market, the data showed.

Year-ago league topper Citigroup has been relegated to fifth as its mainstay equity sale and M&A activity slowed, the data showed.

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