Carlyle, which owns 26% of SBI Cards, may make 700% profit from its IPO
SBI Cards is the second-largest credit card issuer in the country, with 9.4 million outstanding cards as of the end of September.
Carlyle, which owns 26 percentage of SBI Cards, may make 700 percentage profit from its IPO
SBI Cards and Payment Services Pvt Ltd (SBICPS), the credit card unit of the State Bank of India, has filed for an initial public offering (IPO) that could mop up between ₹8,500 crore and ₹9,500 crore, making it one of largest listings in the country.
While the company’s offer document did not spell out the total proceeds from the IPO, sources said the enterprise value of the credit card unit is expected to be around ₹60,000 crore.
According to the draft red herring prospectus (DRHP), the offer will comprise a fresh issue of equity shares aggregating ₹500 crore and an offer-for-sale by promoter SBI (3.72 crore equity shares) and by investor CA Rover Holdings (9.32 crore equity shares).
On November 11, SBI, in a stock exchange filing, said the Executive Committee of its Central Board of Directors accorded final approval for the divestment of up to 4 per cent of the bank’s stake in SBI Cards through an IPO, by way of an offer for sale.
Per SBICPS’ draft red herring prospectus, the reserved portion for SBI shareholders is up to 1.30 crore equity shares and that for SBICPS employees is 18.64 lakh equity shares.
SBI currently owns 74 per cent of SBICPS’ total outstanding equity share capital, and CA Rover Holdings, which is an entity ultimately controlled by the Carlyle group, owns the balance.
To boost capital base
Per the objects of the offer, the net proceeds of the fresh issue — gross proceeds less the offer expenses apportioned to the company — are proposed to be utilised to augment its capital base to meet future capital requirements.
The DRHP said that upon the completion of the IPO, SBI and CA Rover Holdings will continue to hold a significant portion of SBICPS’ issued, subscribed and paid-up equity share capital.
The offer for sale proceeds will boost SBI’s bottomline.
SBICPS is the second-largest credit card issuer in India, with 17.6 per cent and 18 per cent market share respectively in terms of the number of credit cards outstanding as of March 31 and September 30, respectively.
It has 17.1 per cent and 17.9 per cent market share, respectively, in terms of total credit-card spends in FY19 and in the six months ended September 30, 2019, per the DRHP.
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