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SBI Cards $1.4 Billion IPO Braves Virus Turmoil, Subscribed 22 Times

SBI Cards is the second largest credit card issuer in the country, with 9.4 million outstanding cards as of September end.

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The $1.4 billion public issue of SBI Cards and Payment Services Ltd, India's largest IPO in over two years, weathered the coronavirus-led global market turmoil and was subscribed 22.45 times by the final day of bidding.

The credit card arm of the country's top public lender, State Bank of India, drew bids for 2.25 billion shares on Thursday, compared to the 100.3 million shares on offer, stock exchange data as of 1245 GMT showed.

The IPO, the first by a credit card issuer and the fifth largest by any company in India, opened at a time when global financial markets were roiled by fears of the economic impact of the coronavirus that originated in China and is spreading fast outside the country.

The epidemic has killed several thousands and disrupted global supply chains, with policymakers and central banks of major economies stepping in with assurance of stimulus measures.

SBI Cards is the second largest credit card issuer in the country, with 9.4 million outstanding cards as of September end.

"This is a segment of the financial market which is showing good growth and has the potential to grow in the next few years given that penetration is still low," said Siddhartha Khemka, head of retail research at Motilal Oswal Securities.

At the upper end of the 750-755 rupee price range, the IPO could raise as much as $1.4 billion. SBI, which owns 74% in the company, will divest 4%, while Carlyle Group, which holds the rest, is set to sell a 10% stake as part of the IPO process.

SBI Cards plans to issue new shares worth 5 billion rupees ($68.16 million) and is offering up to 130.5 million shares for sale, according to its prospectus.

Of this, anchor investors, including the government of Singapore and HDFC Mutual Fund, have already committed to buy 36.7 million shares at 755 per share. Qualified Institutional Buyers bid for 1.39 billion shares, or 57.18 times the shares on offer.

Kotak Mahindra Capital Company, Axis Capital, DSP Merrill Lynch, HSBC Securities and Capital Markets (India), Nomura Financial Advisory and Securities (India), and SBI Capital Markets were the lead managers for the IPO.


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