State Bank of India (SBI) is now planning to increase about Rs 8,000 crore by selling a minority stake in the initial share sale of SBINSE 0.90 % Cards, which is basically a company that has also turned out to be a multi-bagger for the private equity partner of the lender in the business. SBI CARD IPO Share Price
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A source close to the development stated, “State Bank of India has initiated the process to sell 14 per cent stake in SBI Cards and is looking to raise Rs 8,000 crore through the public issue, valuing the company at Rs 57,000 crore,”
It further added, “Both SBI and Carlyle will sell stakes in the IPO.”
The second-largest credit card provider of the country, SBI Cards & Payments Services, a subsidiary of State Bank of India, has now been shortlisted Axis Capital, Bank of America Merrill Lynch, HSBC, Nomura, Kotak Mahindra Capital as well as SBI Caps as merchant bankers for its mega opening public offer (IPO) in order to raise at least $1 billion, some of the sources revealed the news.
If in case the Gurgaon headquartered firm’s plans fructify, it is then going to be the first domestic listing by a pure-play credit card company.
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On the other hand some of the sources added that the process is probable to start this week as well as the management plans to hit the markets in advance of March 2020.
At the same time, the State Bank of India also holds 74% stake in the company while private equity giant Carlyle holds the left over 26%. This matter is also expected to be a combination of primary as well as secondary issue of shares, with a restricted exit by both SBI as well as Carlyle.
SBI Cards had said in a request for proposal (RFP) inviting bids from merchant banks and law firms, which stated, “The company intends to tap capital markets via IPO through Offer for Sale by dilution of up to 14% of the issued and paid-up capital i.e. up to 13,05,26,798 equity shares and primary issuance of up to Rs. 1,000 crores,”
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As per to a recent PTI report, the SBI Cards MD & CEO Hardayal Prasad had also stated credit business had massive prospective to develop in view of the very low penetration in the nation. On the other hand, he also said there were only three credit cards for a population of 100, as compared to the total of 165 in Singapore and 250 in Hong Kong.
Other than that, as of March 2019, according to the RBI, the SBI Cards was ranked 2nd behind leader HDFC Bank with the credit card base as well as credit card spends taking 17.6% along with 17.1% market share in the respective classifications.
Moreover, the corporate office & registered office, it also comprises of 14 branches all over the country.
On the top of that SBI Cards had also a credit card base of around 8.27 million as of March 2019, clocking a increment of 32.2% on March base of 6.26 million in the year 2018. Yearly spends on its credit cards (eliminating cross-sell) stood at Rs 1,03,170 crore, with an increase of 34.9% year-on-year.
In addition to that the company also has products catering to many segments that are ranging from Simply Save credit card for the masses, SimplyClick for the online savvy, Elite & Prime products for the affluent, as well as Doctors Card for medical practitioners.
In the meantime, there are no immediate comments coming from the SBI Cards, Axis Capital, Bank of America, HSBC, Nomura, Kotak Mahindra Capital as well as SBI Capital.
SBI Cards is basically a joint venture where SBI retains 74 per cent. Buyout firm Carlyle, which also owns the left over 26 per cent, is probably going to sell a part of its holding in the upcoming IPO. In addition to that, back in the year 2017, when Carlyle joined the business as a financial investor, the estimate was of Rs 8,000 crore.
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