The country's second-largest credit card provider, SBI Cards & Payments Services, a subsidiary of State Bank of India, has shortlisted merchant bankers for its IPO.
The country's second-largest credit card provider, SBI Cards & Payments Services, a subsidiary of State Bank of India, has shortlisted Axis Capital, Bank of America Merrill Lynch, HSBC, Nomura, Kotak Mahindra Capital and SBI Caps as merchant bankers for its mega initial public offer (IPO) to raise at least $1 billion, sources with knowledge of the matter told Moneycontrol.
If the Gurgaon headquartered firm's plans fructify, it will be the first domestic listing by a pure-play credit card company.
Sources added that the process is likely to kick off this week and the management plans to hit the markets before March 2020.
State Bank of India holds 74% stake in the company while private equity giant Carlyle holds the remaining 26%. The issue is likely to be a combination of primary and secondary issue of shares, with a partial exit by both SBI & Carlyle.
"The company intends to tap capital markets via IPO through Offer for Sale by dilution of up to 14% of the issued and paid-up capital i.e. up to 13,05,26,798 equity shares and primary issuance of up to Rs. 1,000 crores," SBI Cards had said in a request for proposal (RFP) inviting bids from merchant banks and law firms.
According to a recent PTI report, the SBI Cards MD & CEO Hardayal Prasad had said credit business had huge potential to grow in view of the very low penetration in the country. He said there were only three credit cards for a population of 100, compared to 165 in Singapore and 250 in Hong Kong.
According to the RBI, as of March 2019, SBI Cards was ranked 2nd behind leader HDFC Bank with the credit card base and credit card spends capturing 17.6% and 17.1% market share in the respective categories.
Besides the corporate office & registered office, it has 14 branches across the country.
SBI Cards had a credit card base of about 8.27 million as of March 2019, clocking a growth of 32.2% on March 2018's base of 6.26 million. Annual spends on its credit cards (excluding cross-sell) stood at Rs 1,03,170 crore, an increase of 34.9% year-on-year.
The company has products catering to multiple segments ranging from Simply Save credit card for the masses, SimplyClick for the online savvy, Elite & Prime products for the affluent, and Doctors Card for medical practitioners.
It has co-branded cards in segments like travel (Etihad, IRCTC, Air-India), e-commerce (Yatra, OLA), lifestyle (Central, Tata & 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).SBI Cards, Axis Capital, Bank of America, HSBC, Nomura, Kotak Mahindra Capital and SBI Capital couldn’t be immediately reached for comment.The Great Diwali Discount!
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