Moneycontrol
Last Updated : Mar 22, 2017 12:20 PM IST | Source: Moneycontrol.com

Carlyle may replace GE Cap as SBI Cards' JV partner, invest Rs 2k cr for 26% stake

State Bank of India’s credit cards business venture SBI Cards is likely to have finalised on private equity firm Carlyle as a new partner.

Debit card transactions will get a boost as the Reserve Bank of India will put a limit on merchant discount rate (MDR) and create a framework for asset-light acceptance infrastructure.
Debit card transactions will get a boost as the Reserve Bank of India will put a limit on merchant discount rate (MDR) and create a framework for asset-light acceptance infrastructure.
 
 
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State Bank of India’s credit cards business venture SBI Cards is likely to have finalised on private equity firm Carlyle as a new partner, after long-term partner GE Capital announced its exit in line with its global strategy, reports the Economic Times today.

A formal announcement can be expected in the next few days.

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Before GE’s exit, the SBI Cards business operated under two joint ventures namely SBI Cards & Payments Services Limited that focussed on marketing and GE Capital Business Processes Management Services Limited, controlling the technological and processing needs as a captive BPO (business process outsourcing) unit.

GE Capital owned 40 percent in SBI Cards & Payment Services and 60-percent stake in GE Capital Business Processes Management Services, while residual stakes in both was held by SBI.

SBI had recently talked about hiking its stake in both the joint ventures to 74 percent after its board gave a go-ahead to purchase Rs 1,160 crore worth equity shares from GE Capital. With this move, SBI took over 74 percent stake, leaving a 26 percent stake in each of the 2 JVs for a new partner, but in the process, setting a benchmark valuing the 26 percent stake at Rs 1827- 2000 crore.

With nearly 15 percent market share, SBI Cards recently overtook ICICI Bank to be ranked as the second largest credit cards player in the country. HDFC Bank, with 30 percent share, is the market leader.

SBI Cards, which has a user base of nearly 4 million, declared a dividend for the first time in 2014. The venture posted PBT growth of 33 percent year on year to close FY16-17 at Rs 440 crore. Pre-tax profit was Rs 438 crore in FY16, up 62 percent from a year ago.

It is interesting to note that currently only 37 percent of SBI’s captive customer base of nearly 300 million has subscribed to its cards. Open market makes up for 42-43 percent, co-branded initiatives with various partners like Future Group, Capital First, IRCTC, Air India contribute about 10 percent and the rest comes from corporate cards. SBI aims to double share of co-branded credit cards to 30-33 percent by 2020.
First Published on Mar 22, 2017 12:19 pm
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