SBI has said that a board panel has approved an IPO of its subsidiary SBI Life Insurance by offering the public 10% of the company’s share. The Arundhati Bhattacharya-led bank said it was looking at diluting its stake by 8% through the IPO.
Given that SBI Life was va lued at Rs 46,000 crore following a private placement in December 2016, a 10% stake sale could generate Rs 4,600 crore for the bank.
In December, the country’s largest bank sold a 3.9% stake to private equity investors KKR and Temasek Holdings at Rs 460 a share. The deal valued SBI Li fe at 3.5 times its embedded value of Rs 13,000 crore for 2016 17. Embedded value is a measure of a compa ny’s worth which fac tors in future earnings from policies that have already been sold.
This year, SBI Life has grown its business at 45% as against an industry growth of 22%. SBI Life’s proposed IPO will have enough room for foreign institutional investors as its joint venture partner Cardif (owned by French lender BNP Paribas) has decided against hiking the stake up to the permissible 49%.
The SBI had however taken a call that it would decide to hold over 50% in all its subsidiaries in order to ensure management control.
Source: The Economic Times
Date: 25th March, 2017