SBI Cards IPO Will Raise Rs 6000 Cr By Selling 13 Crore Shares; SEBI Gives Green Light, Launch By February-End
Market regulator, Securities and Exchange Board of India (SEBI) has reportedly granted its in-principal approval to SBI Cards and Payment Services, for floating its initial public offering (IPO).
SBI Cards and Payment Services IPO
SBI Cards and Payment Services is the credit arm of the country’s largest lender State Bank of India (SBI). It is likely to launch its IPO towards the end of February.
Speaking vividly of this IPO approved by the SEBI, SBI Cards is expected to raise Rs 6,000 crore through this public issue, adding that the IPO would value the company at approximately Rs 55,000-60,000 crore.
As per the Draft Red Herring Prospectus ( DRHP) filed with SEBI in November last year, the SBI Cards IPO would offer 13.05 equity shares. The company would also issue fresh equity shares worth Rs 500 crore.
Also, the offer for sale includes up to 3.72 equity shares by SBI and up to 9.32 equity shares by CA Rover Holdings. Upto 1,864,669 shares have been reserved for employees of the company, while 13,052,680 shares for SBI shareholders.
Where Shall the Proceedings be Used?
SBI Cards intends to use the proceeds of the fresh issue for augmenting its capital base to meet future capital requirements. SBI holds 76% stake in SBI Cards and the rest is held by CA Rover Holdings.
Kotak Mahindra Capital Company, Axis Capital, DSP Merrill Lynch, HSBC Securities and Capital Markets (India), Nomura Financial Advisory and Securities (India) and SBI Capital Markets are the book-running lead managers for the issue.
What Can We Understand About This?
Earlier this month, SBI Chairman commented that the SBI Cards IPO would be launched during the current quarter. SBI Cards and Payment Services has 18% market share, next to HDFC Cards that holds 27% of the market share.
In fact, the credit arm had 9.4 million outstanding cards as of the end of September. According to the draft prospectus, the company expects the number of credit cards to increase at an annual rate of 25% per year.
With the listing of SBI Cards on bourses, the firm will become the fifth group company under SBI Group to be listed on exchanges. The IPO involves offer for sale for promoters to exit and fresh issue funds to augment capital base.