Initial data showed that employees were at the vanguard of the bidding, seeking to buy Rs 101.76 crore worth of shares out of the Rs 126.80 crore worth of shares on offer for them.
Retail investors, including employees of SBI Cards, were among the early applicants buying into the initial public offering (IPO) of India’s second-biggest credit card company, leading the bids for the 39 per cent subscription tally reached on the first day.
Institutional and high networth individuals (HNIs) stayed on the sidelines to ensure that they don’t block their money for one extra day bidding for the shares, which remain open for subscription until March 5.
The IPO received bids for 39.4 million shares out of 100.4 million shares on offer, translating into Rs 2,967 crore out of the Rs 7,572 crore worth of shares on offer, at the upper end of the price band. The shares are being offered in the Rs 750-755 price range.
SBI Cards has already raised Rs 2,800 crore from anchor investors that include GIC of Singapore, the sovereign fund of Kuwait, and large foreign institutional investors and private equity funds, such as Fidelity, BlackRock, Nomura, and BNP Paribas. Domestic mutual funds, such as ICICI Prudential, Aditya Birla, Axis Mutual Fund and Kotak Mahindra Mutual Fund, also invested as anchor investors.
“Since the allotment of this issue is not based on the order of applications, large investors have not come in yet. We expect the demand to pick up in the next couple of days, with Wednesday likely to be the busiest,” said an industry executive involved with the share sale.
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“We expect the institutional and HNI segments to be subscribed 30 to 50 times,” said an industry executive involved with the share sale.
SBI Cards plans to raise Rs 10,341 crore through an offer for sale by the promoters — State Bank of India (SBI) and private equity company Carlyle. The share sale plan also includes a fresh issue of stock worth Rs 500 crore.
SBI, the country’s biggest mass lender, will reduce its stake to 70 per cent from 74 per cent, pocketing about Rs 2,816 crore from the sale. Carlyle’s stake will come down to 16 per cent from 26 per cent, netting the private equity major about Rs 7,000 crore and valuing the cards company at Rs 70,000 crore. The last day of the issue has been set aside for retail and HNI bids.
“The order book is strong, given the inquiries coming through banks. The US markets will open later this evening and we will also gauge demand from foreign investors. However, the money will only start flowing in on Wednesday,” said another person involved with the issue.
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Initial data showed that employees were at the vanguard of the bidding, seeking to buy Rs 101.76 crore worth of shares out of the Rs 126.80 crore worth of shares on offer for them.
SBI Cards has allocated 1.864 million shares for employees and is offering a discount of Rs 75 per share to this class of investors.
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Shares have also been reserved for SBI shareholders. These shares received bids worth Rs 678.93 crore out of the Rs 985.48 crore worth of shares on offer. However, bids from the institutional and HNI categories were negligible as they didn’t want to block funds and lose interest for a day.
SBI Card IPO: Why is it being seen as a hot cake?
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SBI Cards and Payment Services, a subsidiary of the State Bank of India (SBI), will hit the primary market with a Rs 10,350 crore initial public offering on March 2. The IPO will be the fifth biggest in India so far. With investor interest already high in the IPO, we bring you all the details you need to know before hitting 'subscribe' on the issue:
(With inputs from Yes Securities and Axis Capital)
SBI Cards and Payment Services, a subsidiary of the State Bank of India (SBI), will hit the primary market with a Rs 10,350 crore initial public offering on March 2. The IPO will be the fifth biggest..
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SBI Cards is the second-largest credit card issuer in India, having a market share of 18.1% in terms of the number of credit cards outstanding as of November 30, 2019. The firm was incorporated on May 15, 1998. It is engaged in the business of issuing credit cards to consumers in India. It is incorporated as a joint venture between State Bank of India and GE Capital Mauritius Overseas Investment.
SBI Cards is the second-largest credit card issuer in India, having a market share of 18.1% in terms of the number of credit cards outstanding as of November 30, 2019. The firm was incorporated on Ma..
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The company has a diversified revenue model whereby it generates both non-interest income as well as interest income on its credit card receivables. The share of revenue from operations that the company derives from non-interest income has steadily increased over the past three fiscal years, from 43.6 per cent in FY17 to 48.9 per cent in FY19, YES Securities said in a report. The company’s total income increased from Rs 34,71 crore in FY17 to Rs 7,286.80 crore in FY19 at a CAGR of 44.9 per cent and its revenues from operations increased from Rs 3,346.20 crore in FY17 to Rs 6,999.10 crore in FY19 at a CAGR of 44.6 per cent. Net profit increased from Rs 372.90 crore in FY17 to Rs 862.7 crore in FY19 at a CAGR of 52.1 per cent. According to a Crisil report, the company is a leading player in open market customer acquisition in India. It had a presence in 3,190 open market points of sale across the country as of 9M FY20.
The company has a diversified revenue model whereby it generates both non-interest income as well as interest income on its credit card receivables. The share of revenue from operations that the comp..
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>> Second largest credit card issuer in India with deep industry expertise and a demonstrated track record of growth and profitability.
>> Diversified customer acquisition capabilities.
>> Support of a strong brand and pre-eminent promoter.
>> Diversified portfolio of credit card offerings.
>> Advanced risk management and data analytics capabilities.
>> Modern and scalable technology infrastructure.
>> Highly experienced and professional management team.
>> Second largest credit card issuer in India with deep industry expertise and a demonstrated track record of growth and profitability.
>> Diversified customer acquisition capabilities.
>> Support of..
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The company derives substantial benefits from its existing relationship with its promoter, and a loss or reduction in the level of support it receives from its promoter could adversely affect the company. In FY19, new accounts acquired from its promoter’s customer base accounted for 55.2% of the company’s total new accounts. The promoter has extended working capital loans and non-convertible debentures to the company.
The company derives substantial benefits from its existing relationship with its promoter, and a loss or reduction in the level of support it receives from its promoter could adversely affect the com..
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The company is involved in an appeal against an order given by National Consumer Disputes Resolution Redressal Commission regarding charging interest rate in excess of 30% per annum from credit cardholders. If the Supreme Court of India upholds the order of the National Commission, this may adversely impact the company and all credit card issuing companies by capping the interest rate charged from credit card holders, thereby having a negative impact on the revenue lines of the company.
The company is involved in an appeal against an order given by National Consumer Disputes Resolution Redressal Commission regarding charging interest rate in excess of 30% per annum from credit cardh..
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Issue Size: Rs 10,350 crore Offer for sale: Rs 9,850 crore Fresh Issue: Rs 500 crore Post-issue m-cap: Rs 70,900 crore Book-running lead managers: Kotak Bank, Axis Bank, BofA, HSBC Listing: NSE, BSE IPO Price: Rs 750-755 IPO Dates: March 2-5
Issue Size: Rs 10,350 crore
Offer for sale: Rs 9,850 crore
Fresh Issue: Rs 500 crore
Post-issue m-cap: Rs 70,900 crore
Book-running lead managers: Kotak Bank, Axis Bank, BofA, HSBC
Listing: NSE, BSE
..
“SBI is not selling as much as Carlyle is, but gains from the IPO will go directly into its bottomline,” said Siddharth Purohit, an analyst at SMC Global Securities. “This can be used by the bank to make additional provisions and will also have to be factored in while calculating its valuations. If SBI Cards commands a premium on the exchanges, it could be about 25 per cent to 30 per cent of the SBI market cap.”
State Bank of India’s shares ended at Rs 287 apiece, down 5 per cent, even as the 30-share Sensex lost 0.40 per cent. SBI’s current market capitalisation is Rs 2.56 lakh crore.
