Carlyle secures partial exit from India's SBI Cards

The private equity firm sold around 93.2 million shares for INR755 apiece, reducing its holding from 26% to 16%. The partial exit implies a return multiple of 8x on the initial investment. SBI continues to be the majority owner of SBI Cards with a 60% stake after selling 37.2 million shares in the IPO on March 2.

The stock began trading earlier this week. It closed at INR683.2 on March 17, up 0.7% for the day. However, a rout of equity markets on March 13 due to concerns related to the spread of the coronavirus disease has adversely affected stock prices. Trading on Indian exchanges was halted for a brief period following a 10% fall in the main indexes. It was the first time this circuit breaker mechanism has been employed since 2009. When tensions cool among equity investors, SBI Cards is expected to stage a comeback.

“SBI Cards shares have been holding up much better than I expected, having staged a recovery after the initial gap down. Peers are down another 5% today which removes any upside from the IPO price, as per my valuation estimates,” said Sumeet Singh, head of research for IPOs and placements at Aequitas Research, writing on the Smartkarma platform yesterday.

In 2017, Carlyle and SBI acquired SBI Cards through a carve-out from GE Capital for around INR20 billion. Back then, the company operated two separate business lines: credit card issuance and business process management services. According to the draft offer document, the latter division has been absorbed within SBI Cards.  

SBI has issued 18% of all outstanding credit cards in the country, second only to HDFC Bank, the Reserve Bank of India's latest report on the sector states. 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%.

“India has a significantly underpenetrated credit card market with strong tailwinds from rising incomes, favorable demographics and the ongoing digitalization of the economy,” said Sunil Kaul, a managing director at Carlyle, in a statement.

Earlier in 2019, Carlyle also achieved a partial exit from India-listed life insurance company SBI Life, selling one-third of its stake for approximately INR28.2 billion.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

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