The initial public offer (IPO) of SBI Cards and Payment Services, the credit card unit of the country's largest lender SBI, will open on March 2, according to its draft red herring prospectus (DRHP). Bidding process for the IPO will close on March 5. The firm plans to issue fresh shares worth Rs 500 crore and offer up to 13.05 billion shares for sale.
SBI Cards and Payment Services plans to open its anchor book for institutional investors around February end, according to media reports. Market regulator Securities and Exchange Board of India (SEBI) granted in-principal nod for the IPO of SBI arm last week.
SBI Cards and Payment Services is backed by State Bank of India and private equity firm Carlyle Group. As part of the IPO process, Carlyle Group, and State Bank of India (SBI) will make partial exit from SBI Cards and Payment Services. SBI has 74% stake in its credit card unit. Carlyle Group, which holds 26% through its subsidiary CA Rover Holdings, will jointly sell 130.5 million shares. SBI and Carlyle will pare their stakes by 4% and 10% respectively.
The offer price for IPO is likely to be fixed between Rs 745-775 per share.
Kotak Mahindra Capital Company, SBI Capital Markets, DSP Merrill Lynch, Axis Capital, HSBC Securities and Capital Markets, and Nomura Financial Advisory and Securities are the book-running lead managers to the issue.
With the listing of SBI Cards, the firm will become the fifth group company under SBI Group to be listed on exchanges. Individual shareholders of SBI can apply under the retail (investment up to Rs 2 lakh) as well as shareholder category (investment up to Rs 2 lakh). If a SBI shareholder is also an SBI employee, he or she is also eligible to apply in the category of employees (investment up to Rs 5 lakh).
SBI Cards and Payment Services has 18 per cent market share next to HDFC Cards which holds 27 per cent market share. The company had 9.4 million outstanding cards as of the end of September. According to the draft prospectus, the company expects the number of credit cards to increase at an annual rate of 25 per cent per year.
Written by Aseem Thapliyal