State Bank of India (SBI) shares rallied over 5 per cent in intraday trade on the Bombay Stock Exchange after the board of the public sector lender approved divestment of its stake in SBI Cards through an initial public offering (IPO).
On Thursday, the executive committee of the Central Board of Directors (ECCB) of the bank had given final approval for divestment of SBI stake in SBI Cards upto 4 per cent. The lender will offload stake through IPO by way of offer for sale of upto 3.73 crore equity shares. However, the lender is yet to disclose the exact amount to be raised through IPO.
The stake sale is subject to the approval of the Securities and Exchange Board of India (SEBI), or Government of lndia, Reserve Bank of lndia and/or such other concerned authorities and departments, SBI said in a statement.
Boosted by the development, SBI share price gained as much as 5.27 per cent to touch an intraday high of Rs 322 apiece, after opening higher at Rs 312 against previous close level of Rs 306.10. The stock touched its 52-week high Rs 373.70 on July 18 this year and its 52-week low of Rs 244.35 on October 9, 2019.
There was surge in volume trade as 26.71 lakh shares changed hand over the counter as compared to two-week average volume of 15.14 lakh shares.
In a similar fashion, stocks of State Bank of India were quoting at Rs 319.90 apiece, up 4.54 per cent on the National Stock Exchange (NSE). The stock opened at Rs 312 against previous closing price of Rs 306.
SBI Cards, a joint venture between SBI and US-based private equity firm Carlyle, is second largest credit card company in India after HDFC Bank. Currently, SBI owns 74 per cent stake in the joint venture, while CA rover Holdings (Group company of Carlyle) holds the remaining 26 per cent. As per media report, both SBI and Carlyle are likely sell a part of their holding in the upcoming IPO.
As per SBI annual report of 2018-19, the bank's card base has grown 32 per cent YoY with the total number of credit cards touching 82.71 lakh as on March 31, 2019. Total spends on cards rose 35 per cent YoY to Rs 1,07,350 crore during the same period.
Edited by Chitranjan Kumar