SBI Card to pip JSW Steel, M&M in m-cap after listing
MUMBAI: SBI Cards & Payment Services Ltd, backed by State Bank of India (SBI) and private equity (PE) firm Carlyle Group, is likely to beat some of the largest firms by market value to rank 44 among the top 50 companies by market capitalisation after listing next month.
The credit card company will open its initial public offering (IPO) on 2 March. The IPO is likely to be priced at ₹750-755 per share and could raise over ₹10,000 crore, a banker directly aware of the matter said, requesting anonymity.
At the upper-end of the price band, SBI Card’s market capitalisation would be over ₹70,000 crore, beating the market value of stock market bigwigs JSW Steel, which has a market cap of ₹68,117 crore, Mahindra and Mahindra (₹65,249 crore), Bandhan Bank (₹66,973 crore), Godrej Consumer Products Ltd (₹64,513 crore) and ICICI Lombard General Insurance Co. Ltd (₹61,142 crore), as of 20 February.
The IPO of the second-largest credit card issuer in the country will remain open for four days in anticipation of high investor appetite. On the fourth day, the subscription will remain open exclusively for retail and noninstitutional investors, while qualified institutional buyers can bid for the offer during the first three days, according to the draft prospectus filed by the company.
The bidding process will close on 5 March. According to a second person, also requesting anonymity, a one-day extension was provided because the Unified Payments Interface (UPI) mechanism is the only option available for retail investors applying for IPOs through intermediaries.
“Under the UPI route, stock exchanges will not allow extension of bidding beyond 5-6pm, unlike the old days when bidding for retail investors continued till 11:30pm. Therefore, it was decided that a day’s extension should be given to retail investors, to avoid investor grievances,” he added.
In November 2018, the Securities and Exchange Board of India launched the UPI as an alternative payment option for retail investors to buy shares in a public issue, in a phased manner from 1 January 2019, in a bid to cut the processing time for an IPO to three days from six (the investor’s money was earlier blocked for six days before allotment). From 1 July 2019, UPI was made the only mode of bidding available to retail investors.
The IPO comprises a fresh issue of ₹500 crore, while the offer for sale would see the promoters offload 130.5 million shares.
The secondary share sale will include up to 37.29 million share sale by SBI and up to 93.23 million shares on offer by the Carlyle Group. SBI holds 74% in SBI Card, while the rest is held by Carlyle. Both will pare their stakes by 4% and 10%, respectively, via the initial share sale.
This will mark the largestever public market exit for a PE firm in India. It will also be the first IPO of 2020. Investment banks Axis Capital, BofA Securities, Nomura and SBI Capital Markets are managing the IPO.
SBI Card started operations in 1998 as a joint venture with GE Capital Corp. In December 2017, GE Capital sold its 40% stake to SBI and Carlyle. The company offers a range of SBI Card-branded credit cards, and co-branded credit cards, such as lifestyle, rewards, travel and fuel, shopping, banking partnership cards and corporate cards, to individual cardholders, as well as corporate clients.
AT THE UPPER-END OF THE PRICE BAND, SBI CARD’S MARKET CAP WOULD BE OVER ₹70,000 CRORE, PUTTING IT AMONG THE TOP 50