The (EOIs) were submitted earlier this month and are now being reviewed by the bank to shortlist names for the second phase of the process, which will be opened for a limited number of bidders. Those making the second short-list will get access to more detailed information on the company and its management team.
AgenciesCarlyle had initially taken a 26% stake in SBI Card after US giant GE Group exited the partnership in 2017. The private equity company completely exited SBI Card last year.
Mumbai: Large overseas private equity firms, such as the $376-billion Carlyle Group, local investors such as Renuka Ramnath's Multiples Alternate Asset Management, and Japan-based financial services company Credit Saison are among investors that have expressed interest in buying up to a 49% stake in BoB Financial Solutions, the credit card arm of Bank of Baroda (BoB), people familiar with the matter said.
The (EOIs) were submitted earlier this month and are now being reviewed by the bank to shortlist names for the second phase of the process, which will be opened for a limited number of bidders. Those making the second short-list will get access to more detailed information on the company and its management team.
"BoB is keen to unlock its investments and fuel growth for its credit card business, which has been languishing for many years. The idea is to build to the scale of an SBI Card for example, for which BoB needs a strong strategic investor who has skin in the game and deep pockets to invest along with the bank into this product," said a person aware of the process.
A BoB spokesperson did not reply to an email seeking comment. Carlyle and Multiples did not reply to emails seeking comment. Credit Saison could not be immediately reached.
BoB has also asked valuers to submit proposals for valuing BoB Financial. ICICI Securities is advising BoB on the deal.
"It is still early days for this transaction and a lot of work is yet to be done. There will be management discussions and due diligence of the prospective bidders which will take some time," said a second person aware of the transaction.
BoB Financial and SBI Card were only the two bank-led NBFCs to be given a credit card licence. However, despite receiving a licence in 1994, full four years ahead of SBI Card, the company has not only lagged its PSU peers but also other smaller private sector lenders that started the business much later.
With just 1.9 million cards outstanding as of March 2023, BoB Cards is even behind smaller private sector lenders like Kotak Mahindra Bank (4.91m), RBL Bank (4.44m) and IndusInd Bank (2.22m). It is way behind market leader HDFC Bank (17.53m), SBI Card (16.76m) and ICICI Bank (14.45m).
However, BoB is banking on stepping up its cross selling to its customers and also open market acquisition and digital sourcing to increase its credit card base.
"The thinking of the Sanjiv Chadha led management is clear. If SBI can sweat its business to be the top credit card issuer, why can't BoB? The idea is to get an aggressive strategic partner like Carlyle, which transformed SBI Card and made it the most valuable subsidiary for the bank," the first person cited above said.
Carlyle had initially taken a 26% stake in SBI Card after US giant GE Group exited the partnership in 2017. The private equity company completely exited SBI Card last year.
Agencies
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