The SBI Card IPO
| Case Code: FINC180 Case Length: 13 Pages Period: 2020-2021 Pub Date: 2021 Teaching Note: Available |
Price: Rs.300 Organization: SBI Cards and Payment Services Limited Industry: Credit Card Countries: India Themes: IPO , Going Public |
Abstract Case Intro 1 Case Intro 2 Excerpts
Abstract
In March 2020, SBI Cards and Payment Services Limited (SBI Card), the second-largest credit card issuer in India and a subsidiary of State Bank of India, came up with the fifth-largest Initial Public Offer (IPO) ever by any Indian company. The IPO included a Fresh Offer of equity shares and an Offer of Sale by existing shareholders. The IPO was phenomenally successful in terms of investors' response and was oversubscribed by more than 26 times. But SBI Card share listing got a tepid debut as the scrip listed at Rs. 661 on the NSE, a 12.45% discount to its issue price of Rs 755, due to prevailing globally negative market sentiments after the rise of COVID-19.
Many investors, who were optimistic about a substantial listing gain from the SBI Card IPO, must decide whether they should sell off their SBI Card shares, hold these shares for long-term gain. or even buy more shares of SBI Card. The case allows students to discuss the growing Indian credit card industry, various aspects of the IPO including the rationale for it, the basis of IPO pricing, the book-building process, IPO expenses, grey market premium, use of net proceeds, the listing of the stock, listing gain, and the timing of the IPO, among others.
Issues
The case is structured to achieve the following teaching objectives:
- To understand the various methods of raising long-term funds.
- To understand the public offering in the Indian context and bring out the pros and cons of raising capital via an IPO.
- To discuss the various concepts related to IPOs such as pricing, the book-building process, listing, listing gain, and timing.
Contents
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Introduction
A Note on the Indian Credit Card Industry
A Note on SBI Card
Financial Performance of SBI Card
Details of SBI Card IPO
Objectives of the Offer
Basis for Offer Price
Investors’ Response
Issue Proceeds
Market Response
SBI Card IPO: A Year Later
Exhibits
Keywords
IPO pricing, Book-building process, Listing gain, IPO timing, Basis of IPO pricing, Grey market, Grey market premium, Credit card Industry, Offer of Sale Fresh Offer, Issue Proceeds, Long term source of finance, Initial Public Offer
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