Ragveer Singh

FINLATICS INVESTMENT BANKING EXPERIENCE PROGRAM

PROJECT -4
CASE – Carlyle Group Exit from SBI Cards and Payment Services Ltd through IPO

The Carlyle Group is an American multinational private equity, alternative asset management and
financial services corporation. It specializes in private equity, real assets, and private credit. In 2015,
Carlyle was the world's largest private equity firm by capital raised over the previous five years,
according to the PEI 300 index. Founded in 1987 in Washington, D.C., by William E. Conway Jr., Daniel A.
D’Angelo, and David Rubenstein, the company today has more than 1,575 employees in 31 offices on six
continents. Some of the companies where Carlyle has invested in are Accolade Wines, Booz Allen
Hamilton, PA Consulting, Dex Media, Dunkin' Brands, Supreme, Freescale Semiconductor, Getty Images,
HCR ManorCare, Hertz, Kinder Morgan, Nielsen, United Defense, 1E and other companies. The Carlyle
Group has a well-established track record of investing in financial services, both in India and globally,
fueled by a deep understanding of the market and an ability to create value through its operational
expertise and close partnerships with management. In India alone, Carlyle has invested more than USD
1.5 billion of equity in a total of eight financial services companies. Established in 2000, Carlyle is the
longest-standing global private equity firm in India. With global resources, deep industry expertise and
strong local knowledge, Carlyle has invested approximately USD 2.5 billion in India as of December 31,
2019. Its notable investments include SBI Life, SBI Card, Delhivery, Metropolis and Tirumala Milk
Products.

SBI Cards was launched in October 1998 by the State Bank of India and GE Capital. Incorporated as SBI
Cards and Payment Services Private Limited (SBICPSL), SBI Card is headquartered in Gurgaon, Haryana.
In December 2017, State Bank of India and The Carlyle Group acquired GE Capital`s stake in SBI Card.
The company changed its legal name to SBI Cards and Payments Services Limited in August 2019. In
March 2020, SBI Card became the first pure play credit card company to list on the stock exchanges in
India.

Shareholding Pattern of SBI Cards

State Bank of India held 60% share in SBI Cards & Payment Services Limited (SBICPSL) and 40% share in
GE Capital Business Processes Management Services Limited (GECBPMSL). GE Capital held 60% in GE
Capital Business Processes Management Services Limited and 40% in SBI Cards & Payment Services
Limited. In 2017, GE Capital exited its JV with State Bank of India as a part of its global strategy to exit
financial services sector. Following this development, State Bank of India increased its share to 74% and
The Carlyle Group invested 26% in both the entities while replacing GE Capital. SBI Card is now a listed
company on India's BSE and NSE stock exchanges.
Answer for part 1
The Carlyle Group sold a 10% stake in its SBI Cards & Payment Services Ltd (SBI Card), the second-largest
credit card issuer in India, through the largest Indian large-cap private sector initial public offering (IPO)
of 2020. Following the IPO, Carlyle continues to hold a 16% stake in SBI Card.

The exit yielded positive return for Carlyle.

Journey of Carlyle till now: -

December 2017 - Carlyle acquired a 26% stake in SBI Card from GE Capital. The deal size was close to Rs
2,000 crore. Equity for this transaction came from an affiliated entity of Carlyle Asia Partners IV, Carlyle’s
fourth Asia buyout fund focusing on buyout and strategic investments across a wide range of sectors in
Asia Pacific. GE Capital exited SBI Card as part of its global strategy to exit the financial services sector as
per its announcement in 2015.

March 2020 – Carlyle exited its 10% stake in its SBI Cards & Payment Services Ltd (SBI Card) through its
IPO. In the IPO SBI divested 4%, while Carlyle sold a 10% stake as part of the IPO process, which also
included a sale of fresh equity worth 5 billion rupees.

September 2021 – Carlyle sell a 3.4 per cent stake in SBI Cards and Payment Services worth $443 million
or Rs 3,267 crore through the stock exchange platform. The sale price was fixed at Rs 1021 to Rs 1072.30
apiece.

Answer for part 2

SBI Cards and Payment Services raised roughly 90 billion rupees ($1.25 billion) in an initial public
offering. The IPO did not give valuation details but based on the anticipated proceeds the IPO likely
valued Carlyle’s 26% stake at close to seven times its 2017 purchase price, and rake in about 60 billion
rupees from the 10% stake sale alone.

Carlyle initial investment was Rs 2000 crore for 26% stake. At the time of IPO after about 3 years, this
stake had risen to about Rs 14000 crore. The investment’s Compounded Annual Growth Rate is 91.3%
over 3 years. Through this investment Carlyle made a bumper profit. It sold its 10% stake and raked in
about Rs 6000 crores.

Answer for part 3

Carlyle kept a 16% stake in SBI Cards after the IPO which is expected to give even higher returns for the
company in the future. Carlyle has further divested 3.4 percent stake fir Rs 3267 in September 2021.