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SBI Cards & Payments Services is looking to launch its IPO in the current financial year. State Bank of India (SBI) – India’s largest public sector bank – is eyeing to mobilize as much as INR8,000 crore (INR80 billion) through SBI Cards IPO.
SBI plans to get the credit card subsidiary listed on Indian stock exchanges in the last quarter of FY2020, a senior SBI executive told the Press Trust of India (PTI). “Roughly about an 8% stake will be divested and after seeing the valuations and the inputs we are getting it would translate to INR8,000 crore,” said the source, indicating a valuation of about INR100,000 crore for the credit card subsidiary.
SBI Cards IPO: SBI starts groundwork, reaches out to banks
Last quarter of the current financial year is quite an aggressive timeline and leaves SBI with just seven months to file draft prospectus with SEBI, get regulatory clearances and eventually launch the IPO. It is not uncommon to see companies take 12 months or more for the entire process.
However, SBI is hopeful of listing the subsidiary within this timeframe since it has already reached out to merchant banks in this regard.
SBI Cards IPO: Strong parentage, second largest player and expanding aggressively
SBI Cards – a joint venture between SBI and US private equity firm Carlyle Group – is the second largest player in India’s ever expanding credit card market. In August 2019, it crossed the milestone of 90 lakh (9 million) cards in force (CIF), second only to market leader HDFC Bank. The country has 4.96 crore outstanding credit cards, according to the latest regulatory statistics. This translates into a market share of 17.7% for SBI Cards in India’s credit card market.
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Evidently, the company has been very aggressive in issuing new credit cards and also tied up with taxi aggregator Ola Cabs and launched a co-branded Ola Money SBI Credit Card. Through the collaboration, it aims to topple market leader HDFC Bank.
For the financial year ended 31 March 2019, the company posted a top-line of INR7,330.3 crore, marking a jump of 35.7% from FY2018. In the same year, its net income surged 35.5% to INR787.8 crore. However, its debt equity ratio stood at a rather high level of 4.23.