- Date : 06/03/2020
- Read: 4 mins
With its IPO, SBI Cards is offering shares to various categories of investors up to a specified limit.
The SBI Cards and Payment Services Private Limited is now a publicly listed limited company as it opens its Initial Public Offering (IPO) for public subscription. Owned largely by the State Bank of India, SBI Cards IPO is open for the period March 2-5, 2020. With this IPO the company expects to raise Rs 10,341 crore through the sale of 13.71 crore shares which are available at Rs 750-755 price band. Minimum investment of Rs 14,250 will be required for this IPO as the shares are available in lots of 19 shares.
Separate share quotas have been defined for various categories of investors who wish to apply for shares under this IPO.
Retail investors will be able to apply for 4,27,81,188 shares available under 22,51,641 lots. A maximum of 14 lots can be applied and a maximum of Rs 2 lakhs in investment can be made by a retail investor under the existing regulations.
SBI shareholders, owning even one share, can apply under this category at a discounted price of Rs 675-680 per share. Rs 126.79 crore can be raised under this category.
Related: Is your IPO rightly valued?
Qualified Institutional Buyers (QIB), including mutual funds, endowment funds, superannuation funds, insurance companies, global portfolio managers, registered Foreign Institutional Investors and their sub-accounts etc. can apply for the 2,44,46,393 shares earmarked under this category. Rs 1845.7 crores can be raised under this category.
Non-institutional buyers include High Net-Worth Individuals investing more than Rs 2 lakhs, corporate entities including private companies, NBFCs etc. can apply to the 1,83,34,795 shares allocated under this category, which can amount to over Rs 1,384 crores.
Anchor Investor is another category earmarked for QIBs. It has 3,66,69,590 shares with a minimum of Rs 10 crores in applications.
Anchor investors, including Singapore government, Monetary Authority of Singapore and Government Pension Fund Global have already been allocated these shares and it has raised Rs 2,769 crores for SBI Cards.
Related: All about IPOs in India
What is SBI Cards?
SBI Cards and Payment Services Private Limited was formed in 1998 by SBI and GE Capital. The Carlyle Group acquired GE Capital’s entire share of 26% in 2017. It is the second-largest credit card issuing company in India with over 90 lakh customers. It has converted itself into a public limited company in August last year.
How has SBI Cards performed financially in recent years?
While comparing the results, we see a growth in revenue from Rs 3,471 crore in FY 17 to Rs 5,370 in FY 18 and Rs 7,286 in FY 19. The profit after tax, too, has grown from Rs 372 crores to Rs 862 crores within these two years. While NPA has marginally increased between FY 17 and FY 19, it has actually been reduced if we compare FY 19 figures with FY 18.
Interest income constitutes 51% of their revenue while fee and other income account for the rest.
What are the growth potentials and concerns?
Credit card outstanding in India is set to grow at a compounded annual growth rate of 23% until 2024, according to CRISIL research. Spends will see similar growth of 24%. India is a very low penetration market compared to developed countries. So there is strong growth potential in the Indian market.
In case of SBI, there is ample cross-selling scope due to the low credit card-debit card ratio. The strong brand value and presence also adds to the growth potential of SBI cards.
There is a universal concern due to the slowing economy, apart from the fact that this industry is also subject to regulatory interventions. Competition can be expected from other credit card issuers and also alternate payment platforms. Besides, SBI Cards has a dependency on SBI for its growth. Here are the biggest IPOs of 2019; the hits and the misses.
The SBI Cards and Payment Services Private Limited is now a publicly listed limited company as it opens its Initial Public Offering (IPO) for public subscription. Owned largely by the State Bank of India, SBI Cards IPO is open for the period March 2-5, 2020. With this IPO the company expects to raise Rs 10,341 crore through the sale of 13.71 crore shares which are available at Rs 750-755 price band. Minimum investment of Rs 14,250 will be required for this IPO as the shares are available in lots of 19 shares.
Separate share quotas have been defined for various categories of investors who wish to apply for shares under this IPO.
Retail investors will be able to apply for 4,27,81,188 shares available under 22,51,641 lots. A maximum of 14 lots can be applied and a maximum of Rs 2 lakhs in investment can be made by a retail investor under the existing regulations.
SBI shareholders, owning even one share, can apply under this category at a discounted price of Rs 675-680 per share. Rs 126.79 crore can be raised under this category.
Related: Is your IPO rightly valued?
Qualified Institutional Buyers (QIB), including mutual funds, endowment funds, superannuation funds, insurance companies, global portfolio managers, registered Foreign Institutional Investors and their sub-accounts etc. can apply for the 2,44,46,393 shares earmarked under this category. Rs 1845.7 crores can be raised under this category.
Non-institutional buyers include High Net-Worth Individuals investing more than Rs 2 lakhs, corporate entities including private companies, NBFCs etc. can apply to the 1,83,34,795 shares allocated under this category, which can amount to over Rs 1,384 crores.
Anchor Investor is another category earmarked for QIBs. It has 3,66,69,590 shares with a minimum of Rs 10 crores in applications.
Anchor investors, including Singapore government, Monetary Authority of Singapore and Government Pension Fund Global have already been allocated these shares and it has raised Rs 2,769 crores for SBI Cards.
Related: All about IPOs in India
What is SBI Cards?
SBI Cards and Payment Services Private Limited was formed in 1998 by SBI and GE Capital. The Carlyle Group acquired GE Capital’s entire share of 26% in 2017. It is the second-largest credit card issuing company in India with over 90 lakh customers. It has converted itself into a public limited company in August last year.
How has SBI Cards performed financially in recent years?
While comparing the results, we see a growth in revenue from Rs 3,471 crore in FY 17 to Rs 5,370 in FY 18 and Rs 7,286 in FY 19. The profit after tax, too, has grown from Rs 372 crores to Rs 862 crores within these two years. While NPA has marginally increased between FY 17 and FY 19, it has actually been reduced if we compare FY 19 figures with FY 18.
Interest income constitutes 51% of their revenue while fee and other income account for the rest.
What are the growth potentials and concerns?
Credit card outstanding in India is set to grow at a compounded annual growth rate of 23% until 2024, according to CRISIL research. Spends will see similar growth of 24%. India is a very low penetration market compared to developed countries. So there is strong growth potential in the Indian market.
In case of SBI, there is ample cross-selling scope due to the low credit card-debit card ratio. The strong brand value and presence also adds to the growth potential of SBI cards.
There is a universal concern due to the slowing economy, apart from the fact that this industry is also subject to regulatory interventions. Competition can be expected from other credit card issuers and also alternate payment platforms. Besides, SBI Cards has a dependency on SBI for its growth. Here are the biggest IPOs of 2019; the hits and the misses.
