Nov. 10 (Bloomberg) -- Bank of America Merrill Lynch, Barclays Plc and JPMorgan Chase & Co. are competing to sell shares for state-run companies in India as the government plans the biggest sell-off in at least five years.

Robert Morrice, Barclays Capital’s Asia-Pacific chairman, plans to double the London-based firm’s investment banking team in India as it vies to sell stock. JPMorgan hopes for a “slew of disinvestment” by state-run companies, said Kalpana Morparia, the New York-based bank’s chief executive officer in India.

Prime Minister Manmohan Singh’s government pledged to cut holdings in its profitable companies to 90 percent, accelerating divestments after a five-year slowdown. The government may raise 256 billion rupees ($5.5 billion) from its publicly traded companies, Standard Chartered Bank said, and controls unlisted firms worth $144 billion, according to Morgan Stanley.

“The competition for this business is always extremely fierce,” Kevan Watts, country head for Bank of America, said in an interview. “It is a big opportunity: we are talking to many people in the government about how we can help with the disinvestment process.”

Indian share sales will add to an IPO rebound in Asia as record-low interest rates and economic stimulus packages fuel a revival in demand for new equities. China Minsheng Banking Corp., Sands China Ltd., Malaysia’s Maxis Bhd. and India’s Emaar MGF Land Ltd. will lead more than $14 billion of sales in the region.

‘Prestigious Business’

While government offers are a “prestigious business,” they typically result in lower fees than private-sector sales, according to Bank of America.

“It is not a very profitable business because the government, understandably, is not prepared to pay very high fees,” Watts said. Bank of America ranked seventh in advising on local sales this year, according to Bloomberg data. JPMorgan ranked sixth on domestic share sales, and first in overseas equity offerings by local firms.

Singh, who won re-election in May, said on Nov. 8 he hopes government sales will accelerate. India netted $11 billion between 1991 and 2008 from asset sales, with the privatization wave slumping during Singh’s first term as communist allies thwarted plans.

India’s benchmark stock index, which had risen every day since the government unveiled the stake-sale plan on Nov. 5, fell 0.4 percent today, limiting its gain for this year to 70 percent.

NMDC Gains

Companies that may sell stock include MMTC Ltd., India’s largest international trading company, and NMDC Ltd., the nation’s biggest mining company. NMDC gained 20 percent, climbing the most in almost seven months in Mumbai trading, after the steel ministry said it will initiate a plan next month to sell a stake in the company.

Indian companies this year have raised 604 billion rupees from domestic shares sales, including private placements, rights offers, initial share sales and secondary sales, according to Bloomberg data. That’s less than the 782 billion rupees raised in 2007, before the global financial crisis sapped demand for equities.

Of this, state-run companies led by NHPC Ltd. and Oil India Ltd. raised $2.05 billion, according to Bloomberg data. Last year, Rural Electrification Corp. led state companies in selling $1.06 billion of stock.

Shares of hydroelectric power producer NHPC have dropped 11 percent since their Sept. 1 trading debut, valuing the company at 402.2 billion rupees. Rural Electrification, which began trading March 12, 2008, has more than doubled.

To contact the reporters on this story: Subramaniam Sharma in New Delhi at ssharma@bloomberg.net

Last Updated: November 10, 2009 05:57 EST