homemarket NewsSBI Cards may be the largest IPO of FY20: All you need to know
market | Nov 28, 2019 1:13 PM IST

SBI Cards may be the largest IPO of FY20: All you need to know

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The country's largest public sector lender State Bank of India (SBI) has filed an initial draft with the market regulator the Security and Exchange Board of India (Sebi) to sell up to 4 percent stake in its credit card venture SBI Cards and Payments Services (SBI Cards) to raise around Rs 9,600 crore through an initial public offering (IPO) under the offer-for-sale route.

The country's largest public-sector lender State Bank of India (SBI) has filed an initial draft with the market regulator the Security and Exchange Board of India (Sebi) to sell up to 4 percent stake in its credit card venture SBI Cards and Payments Services (SBI Cards) to raise around Rs 9,600 crore through an initial public offering (IPO) under the offer-for-sale route.

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About the IPO
The share sale is poised to become the fifth-largest IPO in the country after Coal India, Reliance Power, GIC Re, and Oil and Natural Gas Corp and will help the parent, SBI, raise funds to boost credit growth. For FY19-20 it will be the largest IPO.
SBI, which holds a 74 percent stake in the unit, along with private equity firm Carlyle Group, which holds the rest 26 percent through its subsidiary CA Rover Holdings, will together sell 13 crore shares or 14 percent of the company through the IPO. It is likely to hit the markets early next year. While Carlyle is looking to sell 10 percent stake via the IPO, SBI would sell 4 percent stake in the company.
The initial share sale also includes a fresh issue of shares that will see the company raise Rs 500 crore to augment its capital base and for business growth and is looking to raise Rs 8,000-9,500 crore through the public issue.
The book running lead merchants to the issue are Axis Capital, Bank of America Merrill Lynch, HSBC, Nomura, Kotak Mahindra Capital, and SBI Capital.
Financials
Between FY17-FY20 the company’s total cards spend has seen an annual increase of 54.2 percent. It generates its revenue from fee-based income such as interchange fees, late fees, and annual fees, among others.
In FY19, SBI Cards had posted a net profit of Rs 862 crore on revenues of nearly Rs 7,000 crore. For the six months to September, SBI Cards reported a revenue jump of 36 percent to Rs 4,363.9 crore from a year ago. Its profit jumped 78 percent to Rs 1,034.58 crore during the period.
About the company
SBI Cards is the second-largest credit card issuer in the country with 9.46 million credit cards and has an 18 percent share of the Indian credit card market as of September 30, 2019. Meanwhile, HDFC Bank has the largest credit card business in the country with 13.3 million cards issued, while ICICI Bank stood third with 7.9 million credit cards, as of September 30, 2019, according to data from the Reserve Bank of India.
The company started operations in 1998 as a joint venture with GE Capital Corp. In December 2017, GE Capital sold its 40 percent stake in the company to SBI and Carlyle.
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