SBI Cards plunges 6% as 4% equity changes hands on Exchanges via block deal

According to a term sheet reviewed by Business Standard, CA Rover Holdings, a subsidiary of Carlyle, had put on the block 32 million shares on Tuesday in a price band of Rs 1,021-Rs 1,072.30 per share

Shares of SBI Cards and Payment Services (SBI Cards) plunged 6 per cent to Rs 1,012 on the National Stock Exchange (NSE) and BSE in intra-day trade on Tuesday as private equity (PE) firm Carlyle Group’s proposed to divest 3.4 per cent stake in the company through a block trade.

As of 10:07 am; a combined 37.18 million equity shares representing 4 per cent equity of SBI Cards changed hands on the NSE (36.84 million shares) and BSE (1.31 million shares), the data shows. The names of the buyers were not ascertained immediately.

According to a term sheet reviewed by Business Standard, CA Rover Holdings, a subsidiary of Carlyle, had put on the block 32 million shares in the price band of Rs 1,021–Rs 1,072.3 per share. At the lower end of the price band, Carlyle was expected to raise Rs 3,267.2 crore ($443 million). BofA Securities and Citigroup Global Markets were handling the share sale.

As on 30 June, 2021, CA Rover Holdings, a subsidiary of Carlyle Group, held 6.5 per cent stake in SBI Cards, shareholding pattern data shows.

Earlier, on 18 June 2021, the PE investor had offloaded 5.1 per cent stake to raise over Rs 4,800 crore at an average price of around Rs 1,002. In March 2021, it had divested about 4.25 per cent for Rs 3,940 crore. Morgan Stanley Asia (Singapore) had bought 5.41 million shares at price of Rs 1,002, as per the bulk deal data.

Meanwhile, Edelweiss Securities had initiates coverage on SBI Cards with a ‘BUY’ and target price of Rs 1,350: It is the only opportunity to invest in unsecured consumer credit and payments business that has it all—sustainable secular growth, rousing returns and cosy consolidation. SBI Cards leadership, deep know-how (long experience) and moats will help it gain share in an otherwise difficult-to-master business with high entry barriers, the brokerage firm said in the report dated 15 September, 2021.

“We view SBI Card as a concept stock offering high-growth and high-returns by the only listed player of its kind for a foreseeable future. It would thus sustainably command a premium accorded to few Indian stocks. The regulatory cap; fallout on asset quality from potential covid waves; and evolving alternative consumer credit models are the key risks for price target,” it added.