India’s second-largest credit card
issuer SBI Cards on Wednesday filed the draft red herring prospectus (DRHP).
Banking sources said SBI Cards would be valued at Rs 65,000 crore. The stake sale would help SBI fetch Rs 2,500 crore and Carlyle Rs 6,500 crore. The IPO could mean windfall gains for the PE firm as it had acquired 26 per cent stake in SBI Cards for only Rs 2,000 crore in July 2017.
SBI Cards will be SBI’s second subsidiary after SBI Life Insurance to go public.
Industry players said the attractive valuations of SBI Cards would prompt other companies also to consider listing their credit card
divisions. HDFC Bank is currently in the market leader in this segment.
In the last three financial years, the company’s total cards spend has seen an annual increase of 54.2 per cent.
The company generates its revenue from fee-based income such as interchange fees, late fees and annual fees, among others. The share of revenue from non-interest income has steadily increased over the past three financial years, from 43.6 per cent in 2016-17 to 48.9 per cent in 2018-19 (FY19). In FY19, SBI Cards had posted a net profit of Rs 862 crore on revenues of nearly Rs 7,000 crore.
SBI Cards IPO is being handled by six bankers — Kotak Mahindra Capital Company, Axis Capital, Bank of America Merrill Lynch, HSBC, Nomura, and SBI Capital.