TPG Cap, other PEs in talks to acquire 26% stake in BoB's Credit Card division

1 Dec 2022 , 10:49 AM

TPG Capital, Warburg Pincus, Westbridge Capital, and spokesperson domestic fund Gaja Capital are in the early stages of talks to acquire a 26% stake in BoB Financial Solutions, the credit card arm of Bank of Baroda (BOB), according to multiple people familiar with the development.

However, no confirmation has been received from any of the private equity groups on the said report.

According to central bank data, BoB Cards had 1.57 million credit cards in circulation at the end of October, chasing larger competitors such as HDFC Bank (16.54 million), SBI Card (15.16 million), and ICICI (13.53 million).

In 1994, BoB was the first company to be granted a license to operate an exclusive credit card company. However, BoB was up against stiff competition from private sector banks and the State Bank of India-owned SBI Card.

According to CEO Shailendra Singh, parent Bank of Baroda (BOB) is looking for a strategic investor in the cards business to leverage India’s rising credit culture and rapid expansion in smaller towns.

BoB Financial reported a loss of Rs10 crore in FY22, against Rs43.10 crore loss reported in March 2020. Singh stated that the company anticipates making a profit in the current fiscal year. Gross NPAs have fallen to 7.10% of total loans, the lowest level in four years.

According to a person familiar with the company’s plans, the bank expects to sell up to 26% of its equity to fund its growth.

The post-pandemic credit card space has undergone significant change and is constantly evolving with the rise of e-commerce, the adoption of contactless payments, and changes in the value proposition.

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