This Article is From Mar 02, 2020

SBI Cards Initial Public Offer Opens Today. Should You Subscribe?

SBI Cards IPO Price: SBI Cards is the second largest credit card issuer in the country with a market share of 18 per cent.

SBI Cards Initial Public Offer Opens Today. Should You Subscribe?

SBI Cards IPO: Bidding under the SBI Cards and Payment Services IPO will close on March 5

SBI Cards and Payment Services' initial public offer or IPO will open for subscription on March 2. SBI Cards and Payment Services, the credit card arm of the country's largest lender State Bank of India (SBI), aims to raise around Rs 10,350 crore through the IPO, including new shares worth Rs 500 crore and an offer for sale of 13.05 crore shares. SBI Cards is the second largest credit card issuer in the country with a market share of 18 per cent. Bidding under the SBI Cards and Payment Services IPO will close on March 5.

Here are 10 key things to know about the SBI Cards Initial Public Offer (IPO):

  1. Issue Price: SBI Cards and Payment Services has fixed a price band of Rs 750-755 per equity share for bidding under the IPO.

  2. Size: The SBI Cards IPO will comprise a fresh issue of shares worth Rs 500 crore and an offer for sale (OFS) of around 13.05 crore shares.

  3. Offer For Sale: The OFS will comprise the sale of up to 3.73 crore shares by SBI and up to 9.32 crore shares by CA Rover Holdings, an affiliate of US-based Carlyle Group. As a part of the IPO process, SBI will divest 4 per cent of its stake and Carlyle 10 per cent of its stake.

  4. Company Profile: SBI Cards is the second largest credit card provider in the country with a card base of more than 90 lakh. The company has presence in more than 130 cities in the country, and has a product portfolio that includes premium, classic, travel and shopping, exclusive and corporate cards.

  5. Lot Size: Bids under the SBI Cards IPO can be made in lots of 19 shares. At the higher end of price band, one lot will cost an investor Rs 14,345. Under the IPO, 18.65 lakh shares are reserved for employees of SBI Cards, and 130.53 lakh for SBI shareholders.

  6. Anchor Investors: SBI Cards has raised Rs 2,769 crore from 74 anchor investors, including the Singapore government, the Monetary Authority of Singapore, HDFC Mutual Fund, Government Pension Fund Global and Birla Mutual Fund.

  7. Brokerage Views: Angel Broking has said it is "positive on the future outlook of the company given the favourable industry scenario, large untapped SBI Bank customers and strong financial track record" although the valuations are a bit on the higher side.

  8. Financial Performance: SBI Cards has generated profits in the past three financial years. SBI Cards' net profit increased from Rs 372.86 crore in fiscal year 2017 to Rs 862.72 crore in fiscal year 2019. Total income increased from Rs 3,471.04 crore to Rs 7,286.84 crore during this period.

  9. SBI Cards aims to keep the proportion of non-performing assets (NPAs) at 2.4-2.5 per cent of its total assets, CEO Hardayal Prasad has said. Its gross NPAs stood at 2.47 per cent at the end of last year, down from around 2.9 per cent in March 2018. SBI Cards' management has said that the under-penetrated credit card market in the country gives ample growth opportunities for pure-play credit card companies.

  10. Background: Launched by SBI and GE Capital in October 1998, New Delhi-headquartered SBI Cards is 74 per cent owned by State Bank of India and 26 per cent by Carlyle Group. SBI and the Carlyle Group bought the stake of General Electric's lending arm in SBI Cards in December 2017.