SBI Cards and Payment Services Ltd, the credit-card issuing arm of the country’s top lender SBI, has received a green signal from capital markets regulator Securities and Exchange Board of India (SEBI) for an initial public offering or IPO.
The offering comprises fresh sale of shares worth Rs 500 crore ($70 million) besides a secondary market sale of 130.52 million shares by Carlyle and SBI. The PE giant has offered to sell 93.23 million shares, or a little over one-third of its 26% stake.
The total IPO size is estimated at Rs 9,000 crore ($1.25 billion at current exchange rate) and the offering may result in a 14.5-15% stake dilution, two people aware of the development had earlier told VCCircle.
Carlyle’s 26% stake may dilute to an estimated 16% depending on the price of the IPO and the number of fresh shares issued through the offering, while SBI’s 74% stake will dilute to roughly 69.5%, VCCircle estimates show.
Kotak Mahindra Capital Company, Axis Capital, DSP Merrill Lynch (a Bank of America subsidiary that operates in India), HSBC Securities and Capital Markets (India), Nomura Financial Advisory and Securities (India), and SBI Capital Markets are part of the merchant banking syndicate arranging and managing the share sale.
SBI Cards will become the fifth group company under the SBI Group to go public following the listing of its parent and another group entity SBI Life Insurance Co. Ltd.
SBI General Insurance Co., the non-life insurance arm, is also looking to go public.
Another group company, SBI Home Finance Ltd, was also publicly traded earlier but its shares were suspended in October 2005. SBI filed for the unit’s liquidation three years later.
VCCircle had reported in August this year that SBI was considering a plan to dilute its stake in its credit card subsidiary via an IPO and the bank was seeking the Reserve Bank of India (RBI)’s approval to sell its stake.
SBI Cards, which was incorporated and started operations in 1998, is the second-largest credit-card issuer in terms of number of credit cards outstanding as well as the amount spent with 9.46 million credit cards outstanding as on 30 September. It only trails behind HDFC Bank in terms of the number of cards issued.
Mukesh Trends Lifestyle Ltd, a fabric processor, also received a go-ahead from SEBI for its public float. The firm that has revenues in the region of Rs 230 crore joins a list of around 20 other firms that are sitting with SEBI approval for an IPO.