State Bank of India holds a 74 percent stake in the company while private equity giant Carlyle holds the remaining 26 percent.
SBI Cards & Payment Services, the country's second largest credit card provider, is all set to file its draft red herring prospectus (DRHP) early next week and move towards launching the first domestic initial public offer (IPO) by a pure-play credit card company, sources with knowledge of the matter told Moneycontrol. The Gurgaon-headquartered firm is a subsidiary of the State Bank of India and its IPO is all set to raise around Rs 9000 crore, making it the biggest listing yet in FY20, they added.
State Bank of India holds a 74 percent stake in the company while private equity giant Carlyle holds the remaining 26 percent. The issue is likely to be a combination of primary and secondary issue of shares, with a partial exit by both SBI and Carlyle.
"State Bank of India will sell 4 percent stake and Carlyle will sell 10 percent stake. The primary portion of the issue may be reduced to Rs 500 crore from the originally planned Rs 1000 crore. The management plans to hit the markets before March 2020. A board meeting is scheduled over the weekend to approve the fine-print," a source added.
In a request for proposal inviting bids from merchant banks and law firms in August 2019, SBI Cards had said, "The company intends to tap capital markets via IPO through Offer for Sale by dilution of up to 14 percent 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 crore."
Moneycontrol was the first to report on appointment of merchant bankers for this big-bang listing on September 19, 2019. Axis Capital, Bank of America Merrill Lynch, HSBC, Nomura, Kotak Mahindra Capital and SBI Capital are the merchant bankers working on the IPO along with law firms Shardul Amarchand Mangaldas and Cyril Amarchand Mangaldas.
According to a recent PTI report, SBI Cards MD and CEO Hardayal Prasad had said that 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, as compared to 165 in Singapore and 250 in Hong Kong.
As per the RBI, as of March 2019, SBI Cards was ranked second behind market leader HDFC Bank, with the credit card base and credit card spends capturing 17.6 percent and 17.1 percent market share in the respective categories. Besides the corporate office and 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 percent 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 percent 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 and 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 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 and Karur Vysya Bank). SBI and the merchant bankers and law firms were unavailable for an immediate comment.Are you happy with your current monthly income? Do you know you can double it without working extra hours or asking for a raise? Rahul Shah, one of the India's leading expert on wealth building, has created a strategy which makes it possible... in just a short few years. You can know his secrets in his FREE video series airing between 12th to 17th December. You can reserve your free seat here.