SBI Cards and Payment Services initial public offering (IPO) saw a positive response from investors on the first day of bidding and was subscribed 39 per cent at the end of the day. The second-largest card issuer in the country received bids for 3,94,45,830 shares against the total offering of 10 crore shares under various categories. SBI Cards is planning to raise more than Rs 10,000 crores, which will make it the fifth largest IPO ever in the country. Retail investor category saw bids for more than 62 per cent of the reserved portion of 4.27 crores. Non-institutional investor bid for 22 lakh shares on the first day which was 12 per cent of the shares reserved under the category
Among the other categories, the Qualified Institutional Buyers (QIB) portion was subscribed 0.09 per cent. SBI employees, meanwhile, subscribed more than 80 per cent of the 18 lakh shares offered under the category. Shareholders of SBI put bids for more than 89 lakh shares out of the 1.3 crore reserved for the category.
The SBI Cards IPO would offer a fresh issue of Rs 500 crore and an offer for sale of up to 13 crore equity shares, according to the DRHP filed with SEBI in November 2019. It includes equity shares by SBI and CA Rover Holdings. SBI currently holds 74 per cent and CA rover Holdings (a group company of Carlyle) holds 26 per cent stake in SBI Cards. The second-largest credit card issuer in India, SBI Cards is an arm of public sector lender State Bank of India and has a market share of 18 per cent. The issue price is fixed between Rs 750-755 and if you plan to subscribe, you have to shell out at least Rs 14,250 as the lot size has been fixed at 19 shares.
Analysts are upbeat on SBI Cards IPO, recommending it to subscribe, but there are certain key risks to it as well. These include competition from other leading credit card players, any change in charge rates and fees due to regulatory actions, and high borrowing cost being an NBFC, says Geojit Financial Services in a research note. SBI Cards has raised Rs 2,769 crore from anchor investors. As per the regulatory filing, 12 mutual funds among the 74 anchor investors have been allotted a total of 36.7 million shares at the offer’s upper price band of Rs 755 apiece. LKP Securities see an upside of 62 per cent from IPO price for SBI Cards.
