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State Bank of India (SBI), on Friday said that the executive committee of its central board has approved the divestment of 3.9% stake in SBI Life Insurance Company Ltd.
The bank plans to divest 39 million shares at a price of Rs 460 per share, it said in a notification to the stock exchanges. The bank stands to earn Rs 1,794 crore for its stake sale. This divestment values the life insurance company at Rs 46,000 crore.
The transaction completion is subject to regulatory approvals.
“An investment vehicle affiliated with KKR-managed funds and an affiliate of Temasek, the Singapore based Investment Company, will each purchase 1.95 crore shares from SBI,” the bank said in a statement.
SBI Life is a joint venture between India’s largest lender SBI and BNP Paribas Cardiff. SBI owns 74% in the life insurer. Upon completion of the transaction, SBI will hold 70.1% stake in SBI Life while its joint venture partner, BNP Paribas Cardif, will continue to hold 26%, the bank said.
Kotak Mahindra Capital Company Limited and SBI Capital Markets Limited acted as the exclusive financial advisors for the transaction. In June, SBI Chairman, Arundhati Bhattacharya had said that the lender plans to sell up to Rs 3,000 of non-core investments during the financial year ending March 2017. This is another announcement in the Indian life insurance market which has already seen a merger and an initial public offering (IPO) this year.
The boards of HDFC Standard Life Insurance Company Ltd. and Max Financial Services Ltd in August had signed a three way merger, which would create India’s largest private-sector insurer with total assets more than Rs1.1 trillion and lead to the eventual listing of HDFC Life on stock exchanges.
Before it went public in September, ICICI Prudential Life Insurance Co. Ltd too sold shares through a private placement.
In November 2015, ICICI Bank Ltd sold 6% of its stake in its life insurance joint venture ICICI Prudential Life Insurance. Of this, 4% stake was sold to PremjiInvest and its affiliates. The remaining 2% stake was picked up by Compassvale Investments Pte Ltd, a unit of Singapore-based investment company Temasek Holdings. The transactions, worth around Rs1,950 crore, valued the firm at Rs32,500 crore.
When ICICI Prudential Life Insurance launched its Rs 6,057 crore IPO in September, it managed to sell shares to investors at a valuation of Rs 47,955 crore.
