India’s SBI Cards files papers for $1.3b public offering

Photo: Pradeep Gaur/ Mint

SBI Cards and Payment Services Ltd, the credit card unit of the country’s largest lender, on Wednesday, filed initial share sale documents that could see the company sell shares worth around 9,600 crore.

The share sale is poised to become the fifth-largest IPO in the country after Coal India Ltd, Reliance Power Ltd, GIC Re, and Oil and Natural Gas Corp and will help parent State Bank of India (SBI) raise funds to boost credit growth.

SBI, which holds 74% stake in the unit, along with private equity firm Carlyle Group, which holds the rest 26% through its subsidiary CA Rover Holdings, will together sell 130.5 million shares through the IPO.

“The secondary component of the IPO could be 9,100 crore and will give a partial exit to both its shareholders. While Carlyle is looking to sell 10% stake via the IPO, SBI would sell 4% stake in the company,” two people aware of the matter said, requesting anonymity.

The company is looking to list within the next 3-4 months at a pre-money valuation of 65,000 crore, one of the two people said.

The initial share sale also includes a fresh issue of shares that will see the company raise 500 crore to augment its capital base and for business growth.

“The secondary markets have seen bit of a recovery and that has also spurred some activity in the IPO market. But the positive response is still restricted to good quality companies that have a retail consumer franchise. Many small-cap companies are still finding it tough to get the desired pricing. That said, in the past nine months, the sentiment was really negative and IPO activity was consequently very slow, but it is likely to see some pickup in the coming quarters,” said Mukund Ranganathan, executive director at Motilal Oswal Investment Banking.

The book running lead merchants to the issue are Axis Capital, Bank of America Merrill Lynch, HSBC, Nomura, Kotak Mahindra Capital and SBI Capital.

SBI Cards is the second-largest credit card issuer in the country with 9.46 million credit cards, and had a 18% share of the Indian credit card market as on 30 September. The company started operations in 1998 as a joint venture with GE Capital Corp. In December 2017, GE Capital sold its 40% stake in the company to SBI and Carlyle.

HDFC Bank has the largest credit cards business in the country with 13.3 million cards issued, while ICICI Bank stood third with 7.9 million credit cards, as of 30 September, according to data from the Reserve Bank of India.

For the six months to September, SBI Cards reported a revenue jump of 36% to 4,363.9 crore from a year ago. Its profit jumped 78% to 1,034.58 crore during the period.

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.