SBI Cards and Payment Services Pvt. Ltd, the credit card subsidiary of India’s largest lender State Bank of India, on Monday invited investment banks and lawyers to act as advisers for its proposed initial public offering.
SBI Card, in which SBI owns a 76% stake and private equity firm Carlyle owns the remaining 24%, is looking to raise ₹1,000 crore in primary capital through the proposed IPO, according to the request for proposal document on the company’s website.
The IPO will also comprise an offer for sale of up to 130.5 million shares, representing a 14% stake, owned by existing shareholders. However, the firm did not disclose the quantum of shareholding SBI and Carlyle will individually sell.
The total IPO size is expected to be ₹3,000-4,000 crore, valuing the firm at $2-2.5 billion, said a person on condition of anonymity.
The company has asked interested banks and lawyers to submit their proposals by 11 September. The company said it plans to appoint up to eight banks to manage the IPO. SBI Card is the second company owned by SBI to go public. In 2017, the bank’s life insurance business SBI Life Insurance Co. Ltd went public in a ₹8,400-crore IPO. Carlyle holds a 9% stake in SBI Life.
SBI Card was incorporated in 1998 as a joint venture between SBI and GE Capital Corp. In December 2017, GE Capital sold its 40% stake in the company to SBI (14%) and Carlyle (26%).
Based in Gurugram, the company is one of the leading credit card issuers in India and delivers value by leveraging the brand equity, customer relationship and the vast SBI network. The company’s bouquet of products include Simply Save product for masses, Simply Click for the online savvy, Elite & Prime products for the affluent and rich sections of the society, and a Doctors Card for medical practitioners.
The company also has a portfolio of co-branded cards in travel (Etihad, IRCTC, Air India), e-commerce (Yatra, OLA), lifestyle (Central and FBB), healthcare (Apollo), fuel (Bharat Petroleum), metro (Chennai, Mumbai) and banking partnerships (Oriental Bank of Commerce, Bank of Maharashtra, Lakshmi Vilas Bank, Federal Bank, South Indian Bank, Karnataka Bank, Allahabad Bank & Karur Vysya Bank).
According to Reserve Bank of India, as of March, SBI Card ranked second in the sector with its credit card base and credit card spends, capturing 17.6% and 17.1% market share in the respective categories.
HDFC Bank has the largest credit cards business in the country with 12.48 million cards as on 31 March, while ICICI Bank stood third with 6.64 million credit cards.
The company reported a 32% year-on-year growth with a credit card base of over 8.27 million as on 31 March, as compared to 6.26 million in the previous year. It also reported a 35% year-on-year growth with annual credit card spends of ₹1.03 trillion as on 31 March, as compared to ₹76,470 crore as on 31 March 2018.
For the fiscal to March, the firm reported a revenue jump of 35% to ₹7,054.8 crore, while its profit grew by a similar percentage growth to ₹787.7 crore.
Source: Mint