SBI's Credit Card Subsidiary Plans to Go Public
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SBI Card & Payments Services Ltd, the credit card subsidiary of State Bank of India (SBI), plans to raise about INR 80 billion via an initial public offering this year, a senior SBI executive involved in the process told Reuters. The bank has reportedly tapped banks to run the IPO process and a listing is expected to happen in the last quarter of this financial year.
The State Bank of India currently holds 74 per cent stake in SBI Cards & Payment Services Private Limited, the rest is held by a U.S private equity firm Carlyle Group. "Roughly about an 8 per cent stake will be divested and after seeing the valuations and the inputs we are getting, it would translate to 80 billion rupees," a source directly involved in the process told the news wire.
The Credit Card Market
India's credit card market is still small compared to its debit card market. The latest regulatory data shows that there were 49.6 million credit cards in circulation in the country, compared with 836 million debit cards. SBI Card is the second-largest credit card issuer in the country, with 8.8 million outstanding cards as of June 30 after private lender HDFC Bank in terms of the number of cards issued.
This IPO would value the overall business of SBI Card & Payments Services Ltd at about 1 trillion rupees. The bank had launched SBI Card in October 1998. In December 2017, SBI and the Carlyle Group acquired GE Capital's stake in the joint venture. Currently, SBI has a consumer base of about 6 million using its SBI Card services for payment of products and services.
Earlier this year, home-grown ride hailing company Ola had partnered with SBI Card to launch a co-branded credit card, allowing the company to expand its customer base. The IPO would further allow SBI's management to sell its investment in non-core assets to raise capital. This will be SBI's second subsidiary to be listed.
In 2017, the bank's life insurance business, SBI Life Insurance was listed in an INR 84 billion IPO. It was the biggest IPO after Coal India's in 2010.