Carlyle Fund to Sell Further Holdings in SBI Cards
Carlyle Fund plans to sell the third tranche of SBI Cards stock. In the latest round of block sale, which will be managed by BOFA Securities and Citigroup Capital Markets, Carlyle will sell 3.4% stake in SBI Cards equivalent to 3.2 crore shares of the company in the price range of Rs.1,021 to Rs.1,072.30. This price band had resulted in the stock falling sharply over the last two days on excess supply concerns in the market.
There is an interesting chronology of how the Carlyle stake in SBI Cards has evolved over the years, which is captured in the table below.
|
Time Period |
Stake in SBI Cards (%) |
Buy/Sell of Stake (%) |
Residual Stake (%) |
|
December 2017 |
0.00% |
+26% (from GE Capital) |
26.00% |
|
March 2020 |
26.00% |
-10.11% (sold in OFS) |
15.89% |
|
March 2021 |
15.89% |
-4.25% (block trade) |
11.64% |
|
June 2021 |
11.64% |
-5.10% (block trade) |
6.54% |
|
September 2021 |
6.54% |
-3.40% (block trade) |
3.14% |
The September 2021 block trade is expected to happen as of the time of writing. If you look at the stock price of SBI Cards, the stock price today is at around the same level as it was at the time of the IPO in March 2020. Hence, post IPO, the stock did not make much money for Carlyle.
However, the actual cost of acquisition was much lower at just Rs.2,000 crore for 26% stake in 2017. On that investment, Carlyle is making a 7-bagger, which is phenomenal returns for the PE fund.
Let us return to the latest proposed sale of 3.40% stake by Carlyle. At the lower price band of Rs.1,021, the sale will fetch Carlyle Rs.3,267 crore while at the upper band of Rs.1,072.30, the block deal will fetch Carlyle Rs.3,431 crore. SBI Cards had halved during the pandemic on fears of rising bad assets, but the price has recouped back to IPO levels.
However, investors are concerned with the spike in gross NPAs from 1.35% to 3.91% in the Jun-21 quarter. Carlyle, must anyways be laughing all the way to the bank.
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