SBI Cards IPO oversubscribed 70% as bidding opens for third day; institutional bids flock

SBI Cards and Payment Services IPO sailed through at the open of the third day of bidding, led by Qualified Institutional investors stepping up their game on the last day on bidding for the category. With the third day of bidding — the last for all investors except for retail bidders — still to go, SBI Cards’ Rs 10,350-crore IPO was oversubscribed by 70%. India’s fifth largest IPO ever saw a resounding response by investors, who, despite the scare of Coronavirus becoming a pandemic, showed eagerness to bid. Bids were received for Rs 12,792 crore for 10 crore shares on offer by the promoter State Bank of India and PE firm Carlyle Group.

With this, SBI Cards IPO is oversubscribed in all categories except for non-institutional high networth investors. The offer was oversubscribed 29 per cent by retail individual investors (RII) by 10:30 AM on Wednesday. RIIs bought 5.5 crore shares against the 4.27 crore that were offered to them. SBI shareholders bought 1.97 crore shares, translating to 48 per cent oversubscription. SBI employees were seen taking full advantage of the discounted price of Rs 675-680 that was offered to them, oversubscribing the issue by 85 per cent, buying 35 lakh shares.

Qualified Institutional Buyers (QIB) arrived on the scene on Wednesday, which is the last day of bidding for them subscribing to the issue 342 per cent. QIBs have bid for 8.26 crore shares against 2.42 crore shares offered to them so far. Meanwhile, Non-Institutional Investors (NII) have bid for 91 lakh shares so far making up 50 per cent of the total shares offered under the category.

SBI Cards IPO: All you need to know about the fifth-largest IPO to enter the Indian market

SBI Cards and Payment Services, which is India’s second-largest card issuer will be the first among the card players to enter the market. With strong backing from State Bank of India, analysts expect SBI Cards to perform well when it enters the market. Citing rising discretionary spends and non-cash economy, brokerage firm Prabhudas Lilladher has put a ‘buy’ call on SBI Cards, giving it an expected target price of Rs 1,191. 

SBI Cards IPO was subscribed 39 per cent on the first day of subscription and 88 per cent on the second day. The IPO will remain open till March 5 for retail investors, while today will be the last day for all other investors to bid for the issue. 

With the IPO, SBI will reduce its stake in the company to 69 per cent from the current 74 per cent. On the other hand, Carlyle Group will cut it holding from 26 per cent to 16 per cent. SBI Cards raised Rs 2,769 crores from 74 anchor investors before the IPO opened. Singapore government, Monetary Authority of Singapore, HDFC Mutual Fund, Government Pension Fund Global and Birla Mutual Fund, are among the anchor investors.