HYDERABAD: The $1.2 billion initial public offering (IPO) of SBI Cards and Payment Services, the credit card arm of the State Bank of India (SBI) will open on March 2, according to its prospectus. The bidding process will close on March 5 and shares will be listed on March 16.
The proposed share sale is pegged as the largest IPO this fiscal and is poised to emerge as the fifth-largest IPO in the country after Coal India, Reliance Power, GIC Re and ONGC.
The company also plans to issue new shares worth Rs 500 crore and will offer up to 130.5 million shares for sale, according to the prospectus filed with SEBI. SBI Cards, the second largest credit card issuer in India with an 18 per cent market share, currently counts SBI as its owner holding 76 per cent stake, while the remaining 24 per cent is held by Carlyle Group. As part of the IPO, Carlyle will sell 10 per cent stake and SBI four per cent.
According to Emkay Securities, given the higher share of OFS, it seems that the IPO is primarily to unlock value for the existing investors (SBI and Carlyle) and also to provide an opportunity for non-promoters to invest in a direct play on India’s rising consumerism and digitisation story. “For SBI, the IPO would imply a value of Rs 37 per share (post discount), which is higher than Street estimates, adding Rs 15 to target price for SBI (Rs 350),” it said.SBI Cards was launched in October 1998 by SBI and GE Capital. In December 2017, SBI and The Carlyle Group acquired GE Capital’s stake in the company.
It offers a wide range of credit cards to individual and corporate clients including lifestyle, rewards, shopping, travel, fuel, banking partnership cards, and corporate cards. Besides, it also offers a wide range of value added payment products and services. With a customer base of over 9 million, SBI Card operates via a footprint of over 130 cities.
For the six months to last September, SBI Cards reported revenue growth of 36 per cent to Rs 4,364 crore form a year-ago. Its profit jumped 78 per cent to Rs 1,034 crore during the period. Kotak Capital, Axis Capital, DSP Merryl Lynch, HSBC Securities etc are book-running lead managers of the issue.
SBI Card operates via a footprint of over 130 cities
It offers a wide range of credit cards to individual and corporate clients including lifestyle, rewards, shopping, travel, fuel, banking partnership cards, and corporate cards. Besides, it also offers a wide range of value added payment products and services