SBI Cards shares tank as Carlyle arm looks to offload 4% stake

SBI Card's shares tank as Carlyle's arm looks to offload a 4% stake

SBI Card’s shares tank as Carlyle’s arm looks to offload a 4% stake

SBI Card is a payment solutions provider in India. State Bank of India held a 60% share in SBI Cards & Payment Services Limited (SBICPSL) and a 40% share in GE Capital Business Processes Management Services Limited (GECBPMSL).

On the other side, SBI Cards and Payment Services shares tanked 4 percent as US private equity fund CA Rover Holdings. A member of Carlyle Asia Partners was looking to sell a 4 percent stake worth $514 million or Rs. 3,728 crore through a block deal on Wednesday.

According to a term sheet issued by the sole book-runner, BofA Securities. The stock fell 4.4 percent to hit a low of Rs. 977.20 on BSE. Besides a return of nearly 970 percent in four years, the SBI Card investment would be the best exit by a PE fund on an Indian investment.

While the Washington-headquartered takeover group had received a 26 percent stake in SBI Cards from the GE group for Rs. 2,000 crores in 2017, valuing the company at Rs. 7,200 crore.

Moreover, three years later, in March 2020, India’s second-largest credit card company launched its prude initial public offer (IPO), in which Carlyle sold 10 percent for Rs. 7,000 crores, and made a gain of 8.5 times in three years. Shares of SBI Cards have mobilized 35 percent so far from its IPO price of Rs. 755.

SBI Cards, one of the most profitable companies in the country’s credit card business. It has been obtaining a market share in terms of both the number of cards and spends. 

As per Morgan Stanley, the company has been expanding markets via a focus on the underserved self-employed segment. Besides the share of new-to-credit segments increasing in incremental sourcing primarily from SBI’s customer base, and with its share of smaller cities increasing in progressive sourcing.

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