SBI Cards IPO to be launched this quarter
To begin with, the most awaited initial public offer (IPO) of SBI Cards and Payment Services would take place this quarter. Mr. Rajnish Kumar, chairman of SBI said that SBI Cards remained the credit card unit of the country’s largest lender. Besides, SBI Cards look forward to raising around Rs 9,600 crores through the IPO.
Despite this, he said the penetration of credit cards in the country stood very low. However, he added that with development in the economy, the demand for credit and credit cards would surge.
Moreover, SBI Cards has an 18% market share next to HDFC Cards that holds a 27% market share. Besides, the company had 9.4 million outstanding cards as of the end of September. However, according to the draft prospectus, the company expects the number of credit cards to surge at an annual rate of 25% per year.
Significantly, with the listing of SBI Cards on bourses, the company would become the fifth group company under SBI Group to come listed on exchanges. So then, the IPO involves an offer for sale for promoters to exit. Also, the fresh issue funds to augment the capital base.
Whereas the company would not get any proceeds from the Offer for Sale (OFS). Hence, the net proceeds generated from the fresh issue might come in use for augmenting the capital base. Wherefore, this would meet the company’s future capital requirements.
Also, as part of the IPO process, its promoters namely, Carlyle Group and State Bank of India (SBI) would make a partial exit from SBI Cards and Payment Services. Carlyle Group would offload 10% stake at Rs 6,500 crores.