All background work complete; Carlyle, Credit Saison and Warburg Pincus in fray; existing partner GE to take a final call on selection
State Bank of India (SBI) will announce a joint venture partner for its credit cards arm, SBI Cards & Payment Services, by April.
With 4.6 million cards in circulation and 15% market share, SBI Cards is the second largest credit card company in the country.
Vijay Jesuja, chief executive officer of SBI Cards, told DNA Money, "Our joint venture partner will be announced in April, all the background work is complete. GE has to take a final call among the three companies shortlisted - private equity firm Carlyle, Japanese financial services company Credit Saison and US private equity group Warburg Pincus."
Originally, GE Capital owned 40% in SBI Cards and had the controlling 60% stake in GE Capital Business Processes Management Services which provides the technology support for the card company. Now, the wholly-owned subsidiary of SBI owns 74% in both these companies and the new JV Partner will own 26% stake in each of these entities that together form the SBI's cards business.
"We have already hiked the stake in SBI Card and Payment Services and GE Capital Business Processes Management Services to 74%, spending about Rs 1,168 crore. We will now wait for GE to make an announcement," he added.
Sources said that the valuation of SBI Cards is close to Rs 7,030 crore and Carlyle, the private equity player with a dedicated Asian fund, is keen to take over the GE stake. Carlyle's current India investments include a 49% stake in PNB Housing Finance and Edelweiss Capital.
The average annual spends for an SBI card are at about Rs 70,000.
"Post demonetization, our high-value discretionary spends have come down while the lower-value spends have gone up by 35%. This makes up for the lower high-value spends on the card. We are also going to increase card count by trying to tap the 300 million customer base of State Bank of India and also targeting the lower income population," added Jesuja.
To meet this goal of making India more credit card-friendly, the company launched 'SBI Card Unnati' targeted at all SBI customers, including Jan Dhan account holders throughout the country. Tailored for new users of credit cards -- those who do not have credit history, this new 'SBI Card Unnati' would have no annual fees for initial four years and will be offered through 20,000-plus SBI branches across India.
The card was launched by Piyush Goyal, Minister of State for Power, Coal, New and Renewable Energy and Mines.
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