As per financial criteria set by the bank, corporates who put in a bid must have a minimum tangible net worth of Rs 500 crore as on December 31, 2018 on an audited or provisional basis.
Bank of Baroda (BoB) on Tuesday sought expressions of interest (EoIs) from prospective partners who will hold a non-controlling stake in its wholly-owned subsidiary BOB Financial Solutions (BFSL), which is primarily in the business of issuing credit cards and acquiring merchants. BFSL has a net worth of Rs 248 crore.
“The company has recently also forayed into the personal loans business. The bank seeks to bring in a partner with non-controlling stake in BFSL to partner with the bank for growing the business operations of BFSL,” BoB said in a bid document.
As per financial criteria set by the bank, corporates who put in a bid must have a minimum tangible net worth of Rs 500 crore as on December 31, 2018 on an audited or provisional basis. For investment funds, including private equity funds, the requirement is to have a minimum asset under management worth Rs 2,000 crore in India as of December 31, 2018 or committed funds available for investment or deployment in companies incorporated in India of at least Rs 2,000 crore as of December 31, 2018.
A presentation on BoB’s website says that BFSL is the 10th largest issuer in terms of incremental monthly card issuance as of March 2019. It had a card base of 2.31 lakh in March 2019 and issued 1.2 lakh new cards in FY19. Spends made using BFSL’s cards added up to Rs 1,229 crore in FY19, up 30% from FY18. The company had an operating revenue of Rs 233 crore in FY19 and profit after tax (PAT) of Rs 4 crore.
BFSL has marketing partnerships with e-commerce platforms Snapdeal, Paytm Mall, Myntra and MakeMyTrip. For distribution, it relies on BoB’s own customer franchise through deployment of dedicated personnel (DSTs) across the open market and the bank’s branches, digital channels and direct selling agents (DSAs).
BoB’s larger peer State Bank of India (SBI) has also opted for a partnership-based model for two of its payments subsidiaries — SBI Card and SBI Payment Services. Since December 2017, SBI has been holding 74% while Carlyle holds 26% in SBI Card. Prior to that, the bank’s JV partner in the credit card firm was GE Capital. Later, in January 2019, Hitachi Payment Services acquired a 26% stake in SBI Payment Services, which runs SBI’s merchant acquiring business.