Street signs: SBI Cards IPO, large-sized advisors eye mergers, and more

SBI Cards’ grey market premium moderates 

The grey market premium for SBI Cards and Payment Services has seen some moderation following a 7 per cent crash in the stock markets last week. Grey market operators were paying a premium of as much as Rs 400 per share of the credit card company. The premium has now dropped to below Rs 300 per share. Still, this is a hefty premium of 45 per cent over the upper-band issue price of Rs 755 per share. Market players said the prevailing risk-off sentiment could make a dent in demand for the IPO. However, investment bankers said they have firm commitments from institutional investors and expect the issue to be a success. The Rs 10,355-crore IPO —India’s fourth biggest — opens on Monday.   

Samie Modak

Index inclusion hopes for HDFC Life

HDFC Life Insurance has a serious shot at becoming the first insurance company to make it to the Nifty index. Despite having a fairly large free-float market capitalisation — a key criterion for index inclusion — the private sector life insurer was never part of the derivatives club. To be part of the Nifty, it is important for a stock to be traded in the futures and options (F&O) segment. Starting this week, F&O contracts based on HDFC Life shares will be traded. Many analysts say the stock could make it to the 50-share blue chip index during the next reshuffle.

  

Samie Modak

Large-sized advisors eye mergers  

Independent financial advisors (IFAs) with larger asset size are looking at mergers to scale up their business. “Individual mutual fund (MF) distributors who have gained Rs 200 crore-Rs 400 crore of asset base are looking at merging their business with other players so that they can rapidly scale up their business. This would help them to absorb the cut in commission payouts in a more efficient manner," said an IFA. In some instances, advisors are looking at partners, which have already built a large corporate entity for distribution of financial products. "At a later stage, the merged business can be monetised by stake sale to private equity investors," the IFA said. 

Jash Kriplani