SBI may Sell up to 5% Stake in SBI Life Insurance

State Bank of India Ltd (SBI) is holding talks with private equity funds to sell as much as 5% in SBI Life Insurance Co. Ltd, said three people aware of the development, including an SBI official.

The names of the private equity funds the bank has approached could not be immediately ascertained.

SBI Life is a joint venture between State Bank of India and BNP Paribas Cardiff. SBI owns 74% in the life insurer.

“The process to sell up to 5% stake in the SBI Life is already underway, and the bank is involved in discussions with some investors,” said one of the three people cited above, requesting anonymity, as the talks are private. SBI Capital Markets Ltd is advising the bank on the investment, the person said.

The stake sale could fetch the bank as much as Rs.1,950 crore, according to a second person cited above.

“They are seeking a valuation of at least three times the financial year 2015-16 embedded value of Rs13,000 crore. ICICI Prudential Life listed at a multiple of over three times its FY16 embedded value, so the bank feels that this valuation should be achievable,” he said.

SBI is exploring the option of selling a stake in SBI Life, said a senior official at the state-owned bank on condition of anonymity. “The bank hasn’t taken a call on the quantum of stake, but expect the deal to be completed in Q3,” the official said.

“SBI Life is exploring options for the stake sale,” the bank said in an emailed response.

The plan to sell a stake comes at a time when the life insurer has been firming up plans to go public.