IPO Will Sail Through Market Turmoil: SBI Cards

Indo-Asian News Service

28 Feb 2020, 08:27 PM IST

The Rs 9,000-crore IPO is India's fifth largest and first from a pure-play credit card company

The upcoming mega IPO of SBI Cards and Payments will sail through the current stock market bloodbath, the company management said on Friday, while relying on the response received from the anchor investors to the IPO.

Hardayal Prasad, MD and CEO of SBI Cards, said that for qualified institutional buyers (QIBs), the subscription will close on March 4, while the issue closes on March 5. The under-penetrated credit card market in India gives ample growth opportunities for pure play credit card companies such as SBI Cards, he added.

But the continued erosion of stocks, leading to Friday's meltdown, has in some way added to the possibility of a downturn over the much-awaited initial public offering of SBI Cards and Payment Services (SBI Card).

The IPO, India's fifth largest, and the first from a pure play credit card company is set to open for subscription Monday to Thursday.

The initial public offering (IPO) of SBI Cards and Payment Services Ltd, the credit card unit of India's largest lender State Bank of India (SBI), will open for subscription on March 2.

The price band of Rs 9,000-crore IPO has been set at Rs 750-Rs 755 per equity share.

Viren Jairath, vice president, Kotak Investment Banking, said that the anchor book is already open today and "we are seeing pretty good response there".

"We hope retail subscription would also follow the same pattern which it normally does. The market is a little bit on a downward trajectory which is more on macro environment such as coronavirus. Our roadshows were completed in January and we have seen very strong response from both QIBs and HNIs (high networth individuals) we have met. On that basis we decided to go ahead with the IPO. We believe it is going to be a pretty overwhelming response," he said.

SBI Cards is 74 per cent owned by the SBI, while Carlyle Group owns the remaining 26 per cent. Carlyle bought the stake in 2017 from GE.

As part of the IPO, SBI will divest 4 per cent of its stake, while Carlyle will sell 10% of its stake.

Hardayal said SBI Card's NPA is at 2.47 per cent. SBI Cards IPO comprises issue of fresh equity shares aggregating to Rs 500 crore and an offer for sale of nearly 13 crore shares.

SBI and Carlyle Group will offload 3.73 crore shares and 9.32 crore shares respectively.