Market regulator Securities and Exchange Board of India (SEBI) has reportedly granted its in-principal approval to SBI Cards and Payment Service for floating its initial public offering (IPO). SBI Cards is likely to launch its IPO in February.
The credit card arm of State Bank of India (SBI) is expected to raise Rs 6,000 crore through the public issue, the Moneycontrol reported. The IPO would take the company's value to Rs 55,000-60,000 crore, the report further added
According to the DRHP filed with SEBI in November last year, the SBI Cards IPO would offer 13,05,26,798 equity shares. This includes up to 3,72,93,371 equity shares by SBI and up to 9,32,33,427 equity shares by CA Rover Holdings. The company would also issue fresh equity shares worth Rs 500 crore.
SBI holds 76 per cent stake in its credit cards subsidiary, and the rest is held by CA Rover Holdings, an affiliate of Carlyle Asia Partners IV.
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 for the issue.
Earlier this month, SBI Chairman Rajnish Kumar had said that the SBI Cards IPO would be launched during the current quarter. SBI Cards and Payment Services has 18 per cent market share next to HDFC Cards that 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.
With the listing of SBI Cards on bourses, the firm will become the fifth group company under SBI Group to be listed on exchanges. The IPO involves offer for sale for promoters to exit and fresh issue funds to augment capital base.
As part of the IPO process, its promoters, namely Carlyle Group, and State Bank of India (SBI) will make a partial exit from SBI Cards and Payment Services. SBI and Carlyle are reportedly paring their stakes through Offer for Sale (OFS) process by 4 per cent and 10 per cent respectively. The stake sale could be India's largest-ever PE exit through a public listing in India.