PE-backed SBI Cards wins approval for India IPO

The company plans to sell 130 million shares in a secondary sale, according to The Economic Times, which cites a regulatory update by the Securities Board of India (SEBI). This will include 93.2 million shares held by Carlyle. SBI Cards will also issue INR5 billion in new shares. 

Carlyle currently owns a 26% stake in the company. It partnered with SBI to buy out GE Capital in 2017 when the parent company, General Electric, sought to pare back its financial services interests globally.

According to the Reserve Bank of India’s latest report, SBI  has issued 18% of all outstanding credit cards in the country, second only to HDFC Bank. Since Carlyle’s investment, the number of credit card holders has nearly doubled, with 9.8 million SBI-branded cards issued. Over the same period, overall credit card usage in India grew by 69%. 

According to a draft offer document filed in December last year, the card and payment services unit earned INR13.3 billion in profit for the year ended March 2019. Revenue reached INR69.9 billion, having doubled over the past two years.

More than half of new cardholders signed up in the most recent financial year were SBI customers. The company offers co-branded cards to corporate clients as well as credit cards issued to SBI account holders. Credit card spending associated with co-branded cards represented 19.3% of the total last year.

The business is built on two core revenue streams: non-interest income arising from fees related to late payment, interchange fees and annual fees; and interest income on payments made through the credit card. Non-interest income contributed 48.9% of total revenue in the 2019 financial year.

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• Topics
• South Asia
• Financials
• IPO
• India
• The Carlyle Group