The initial public offering of SBI Cards and Payment Services, the subsidiary of country's largest lender State Bank of India, has subscribed 38.87 percent on March 2, the first day of bidding.
The public issue has received bids for 3.94 crore shares against IPO size of more than 10 crore shares (excluding anchor investors' portion, as per the data available on exchanges.
The portion set aside for retail investors has been subscribed 62.76 percent and that of employee has seen subscription of 80.32 percent and shareholders at 68.8 percent.
The reserved portion of qualified institutional investors has subscribed 0.09 percent, while that of non-institutional investors 12.05 percent.
SBI Cards is aimed to raise Rs 10,355 crore through the issue which will remain open for qualified institutional bidders till March 4, and other investors can put in bids till March 5.
The IPO consists of a fresh issue of Rs 500 crore and offer for sale of up to 13,05,26,798 equity shares by parent firm State Bank of India and investor CA Rover Holdings, an affiliate of private equity Carlyle Group.
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The offer also includes a reservation of up to 18,64,669 equity shares for subscription by eligible employees, which will get shares at a discount of Rs 75 per share on final issue price, and reservation of up to 1,30,52,680 equity shares for SBI shareholders.
The country's second largest credit care issuer already raised Rs 2,769 crore from 74 anchor investors on February 28, a day before the issue opened, at a higher end of price band of Rs 750-755 per share.
The net proceeds of the fresh issue are proposed to be utilised for augmenting the capital base of the company to meet future capital requirements.
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Considering the past history of primary market, this is the largest main board IPO after General Insurance Corporation of India which raised Rs 11,372 crore in October 2017.
Santosh Meena, Senior Analyst at TradingBells feels SBI Card is going to be a very successful IPO both in terms of subscriptions and listing gain.
The major reasons he pointed are the second-largest player in the Indian credit cards market with nearly 18 percent market share, India is under-penetrated in terms of credit card market, the government has a focus on digital transactions, first company to list from the credit card industry, strong parentage of SBI, which provides access to its extensive branch network and company's 18 co-branded partnerships, the highest in the industry compared to other players.
SBI Card's total credit card spends grew at a compounded annual growth rate of 54.2 percent over FY17-FY19 compared with an industry average of 35.6 percent.
"The credit card industry in India is underpenetrated, approximately 4 cards per 100 persons as against the 30 cards per person in advanced economies. SBI Cards is the second-largest pure-play credit card player with a strong parental lineage and well-positioned to maintain strong growth trajectory. This may help securing attractive valuations, though the objective of the OFS and IPO remains one of unlocking the value for existing investors, SBI and Carlyle Group," Bhavesh Sanghvi, CEO at Emkay Wealth Management also told Moneycontrol.
He feels for the domestic markets, this is an opportunity to be invested into the rising theme of consumerism and digitalization.