SBI Life plans IPO, SBI to dilute 10 per cent stake in its Insurance Arm

India’s Largest Bank and Lender State Bank Of India is planning to dilute 10 percentage stake in its Life Insurance subsidiary SBI LIFE through Intial Public Offer route.The Executive Committee of Central Board in its meeting held today accorded in-principle approval for initial public offer (IPO), SBI said in a regulatory filing to stock exchanges.The board has given approval to “initiate process for offer for sale of 10 per cent of shares through initial public offer”, it said.

As per the reports State Bank of India is palnning to dilute 8 percentage stake of its own out of 10 percentage which is offering sale to public. SBI Life is a joint venture between SBI and Cardiff based BNP Paribas out of which SBI holds 74 percentage and remaining by BNP Paribas. It was ruled out rumours which was foating around the market that they are increasing their stake to 49 percent any time soon or atleast before the IPO which is expected next year.; SBI Life has an authorised capital of Rs 2,000 crore and a paid up capital of Rs 1000 crore.

State Bank of India last year diluted their 3.9 percent stake to strategic private equity investors like KKR and Singaporean sovereign fund Temasek Holdings for Rs 1,794 crore or $264 million and after that stake sale SBI stake in SBI Life came down to 70.1 percent from 74 percent while BNP Paribas Cardiff still holds their 26 percentage stake. This deal has given valuation to the country’s third largest private life insurer at around Rs 46,000 crore.

SBI Life chief executive officer Arijit Basu told that they already started the procedures and by end of september they will go to the market to clearall the regulatory approvals. However management did not commented on the timeline for launching this IPO.

Insurance companies are in limelight regarding their IPO plans and ICICI Prudential Life IPO last September may have set an example for more insurance listings. SBI Life’s IPO comes after top private sector life insurer ICICI Prudential Life Insurance Co Ltd’s Rs6,057 crore initial share sale last September.

HDFC Standard Life Insurance Co Ltd, another bigger private sector life insurer, aims to get listed via its acquisition of smaller rival Max Life Insurance but still waiting for regulatory approvals. However, Canara HSBC Oriental Bank of Commerce Life Insurance, Aviva India Life Insurance and Max Bupa Health Insurance are known to be preparing for their public listings. In addition, the central government has indicated it will list five general insurance companies – New India Assurance Company, United India Insurance, Oriental Insurance Company, National Insurance Company, and reinsurer General Insurance Corporation of India (GIC).I

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