SBI share price zoomed on Friday after India’s largest PSU bank approved divestment of its stake in SBI Cards through an initial public offering (IPO). State Bank of India shares zoomed more than 5.7% to hit the day’s high at Rs 323.50 on BSE. In a statement to the exchanges, SBI said that bank’s board has approved the divestment of SBI stake in SBI Cards up to 4% through IPO (initial public offer) by way of offer for sale of up to 3,72,93,371 equity shares (the “Offered Shares”). The development is subject to the approval of the Securities and Exchange Board of lndia (“SEBI”), or Government of lndia, Reserve Bank of lndia and/or such other concerned authorities and
departments, SBI added in its statement.
SBI Cards and Payment Services Private is a leading credit card issuer in India and is also a non-deposit accepting systemically important NBFC registered with the Reserve Bank of India. The firm has reported a profit after tax of Rs 788 crore in FY2019 at YoY growth of 36%. Interestingly, SBI Cards is a joint venture between SBI and US-based private equity firm Carlyle. The firm is currently the second largest credit card company in India after HDFC Bank. SBI has 74 per cent stake in the joint venture, while CA rover Holdings (Group company of Carlyle) holds the remaining 26 per cent. According to media reports, both SBI and Carlyle are likely sell a part of their holding in the upcoming IPO.
SBI’s annual report of 2018-19 stated that during the previous fiscal year (FY-19), the company’s card base has grown by 32% YoY with the total number of credit cards reaching 82.71 lakh as on March 31, 2019. Total spends on cards witnessed a YoY growth of 35% to Rs. 1,07,350 crore for the same period. The company is positioned at Rank 2 with 17.2% spends share and 17.4% cards base as per RBI report for February 2019.