The initial public offer (IPO) of SBI Cards and Payment Services, the credit card unit of the country’s largest lender SBI, is likely to be launched in the first week of March. The firm plans to open its anchor book for institutional investors around February end, according to media reports. Market regulator Securities and Exchange Board of India (SEBI) granted in-principal approval to the IPO of SBI Cards and Payment Services last week.
SBI Cards and Payment Services is backed by State Bank of India and private equity firm Carlyle Group. As part of the IPO process, Carlyle Group, and State Bank of India (SBI) will make partial exit from SBI Cards and Payment Services.
SBI owns 74% in its credit card unit and Carlyle Group, which holds 26% through its subsidiary CA Rover Holdings, will jointly sell 130.5 million shares. SBI and Carlyle will pare their stakes by 4% and 10% respectively. The credit card unit of the country’s largest lender SBI plans to raise Rs 9,600 crore through the public issue.
SBI holds 76 per cent stake in its credit cards subsidiary, and the rest is held by CA Rover Holdings, an affiliate of Carlyle Asia Partners IV. Kotak Mahindra Capital Company, SBI Capital Markets, DSP Merrill Lynch, Axis Capital, HSBC Securities and Capital Markets, and Nomura Financial Advisory and Securities are the book-running lead managers to the issue.
SBI Cards may be valued at Rs 60,000 crore, implying valuations of 41 times FY20 annualised earnings per share compared to 9-18 times of global peers, according to market experts. Earlier this month, SBI Chairman Rajnish Kumar had said that the SBI Cards IPO would be launched during the current quarter.
SBI Cards and Payment Services has 18 per cent market share next to HDFC Cards that holds 27 per cent market share. The company had 9.4 million outstanding cards as of the end of September. According to the draft prospectus, the company expects the number of credit cards to increase at an annual rate of 25 per cent per year.