India’s first credit card IPO slips in debut as markets tumble

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SBI Cards & Payment Services Ltd. declined in its stock market debut as investor uncertainty stemming from the coronavirus pandemic cast a shadow over the listing of India’s first pure-play credit card issuer.

SBI Cards’ shares opened at 675 rupees, compared with the offer price of 755 rupees apiece. The stock traded at 737 rupees at 10:53 a.m. in Mumbai, valuing the company at about $9.3 billion.

The stock’s launch couldn’t have come at a worse time. While concerns over the widespread disruption of businesses due to the outbreak have rattled stock markets globally, slowing economic growth and the seizure of Yes Bank Ltd. have damped the appetite for risk at home as well. Trading in Indian equities was halted briefly on Friday after a 10% slump in the main indexes triggered a market-wide circuit breaker.

Still, the $1.4 billion initial public offering was 22.5 times oversubscribed due to the company’s perceived potential for growth in an under-penetrated Indian market, its dominant position in the industry and strong parentage in the form of country’s largest bank worked in its favor.

“The overhang of the pandemic is weighing on investor sentiment even though SBI Cards remains a good bet on India’s long term consumption story,” said Chokkalingam G, head of investment advisory Equinomics Research & Advisory Pvt. in Mumbai. “Deflationary conditions in fact see credit card spends go up. The stock is still a buy as the current disruption doesn’t alter the long-term potential of the company given the country’s low penetration of credit cards.”

Priced at the upper end of its expected price band, the IPO raised 70.4 billion rupees ($952 million) for its backers, State Bank of India and Carlyle group. It drew 74 anchor investors including the Singapore government and Kuwait Investment Authority, raising 27.7 billion rupees.

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