State Bank of India gears up for IPO of PE-backed credit cards unit
Photo Credit: Reuters

State Bank of India is considering a plan to dilute its stake in its credit card subsidiary via an initial public offering, the country’s largest lender by assets said on Wednesday.

SBI informed the stock exchanges that it has given its in-principle approval to explore the possibility of diluting its stake in SBI Cards & Payment Services Pvt. Ltd through an IPO.

The bank will now seek regulatory approval to sell the stake in SBI Cards.

VCCircle had reported in 2017 that Carlyle was in advanced stages to acquire a 26% in two credit card joint ventures as GE Capital was looking to exit these firms.

The SBI cards JVs have been looking to capitalise on the growing opportunities in India as cashless transactions increase.

According to SBI's annual report, SBI Cards grew its card base nearly 37% at the end of fiscal year 2018 to 6.26 million users compared with 4.57 million users at the end of fiscal year 2017.

Its net profit stood at Rs 363.13 crore at the end of March 2018 compared with Rs 390.41 crore in the year prior, while revenue stood at Rs 4,965.56 crore compared with Rs 3,238.64 crore.

Carlyle had reportedly trumped Japanese financial services firm Credit Saison and US private equity firm Warburg Pincus to emerge as the buyer of GE Capital’s stake.

The banking, financial services, and insurance (BFSI) sector has been at the forefront of India’s deal making for the last few years. The space sector recorded two big mergers in the last two quarters that jacked up the total deal value even as private investment activity remained on a stable path.

Among the marquee deals, bulge-bracket investor Carlyle made its single-biggest investment in India earlier this year when it purchased a 9% stake in SBI Life Insurance Co. Ltd.

In fact, primary markets activity in 2017 were dominated by BFSI companies. While state-run as well as private-sector insurers launched the biggest IPOs, the year also saw a stock exchange, a commodity exchange, a depository, a small finance bank and an asset management firm going public.

The BFSI companies raised nearly Rs 51,413 crore, or 76% of the total IPO pie. Insurance companies alone raised Rs 43,558 crore.

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