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It will be listed for unlocking the value in subsidiaries

Paul Noronha

Listing plans: Mr O.P. Bhatt, Chairman, State Bank of India, with Mr T.S. Bhattacharya, Managing Director, at a press conference in Mumbai on Thursday.—

Our Bureau

Mumbai, June 28 The country’s largest bank, State Bank of India, plans to go the ICICI Bank way and set up a holding company to transfer its shareholding in its insurance and asset management subsidiaries.

The holding company will have SBI’s stake in SBI Life (a joint venture between SBI and Cardiff SA of France) and SBI Funds Management Ltd (a joint venture with Societe Generale Asset Management) and subsequently its stake in a proposed non-life venture.

The holding company, which will be an NBFC, will be set up in the next three to four months.

The bank plans to list the holding company to meet the capital requirements of its insurance and asset management companies, said Mr O.P. Bhatt, Chairman, State Bank of India.

“By listing the holding company, we are trying to unlock the value in our subsidiaries which will also be reflected in the value of SBI,” said Ms Bharati Rao, Deputy Managing Director, SBI.

ICICI Bank had set up a holding company — ICICI Financial Services — by transferring its stake in the insurance and asset management subsidiaries.

FIPB had however, rejected the bank’s proposal to sell part of the stake in the holding company to foreign investors.

Mr Bhatt said SBI would not divest more than 10 per cent in the holding company to other investors. “We will divest not more than 10 per cent equity in the NBFC to 3-4 investors but it will be mainly for price discovery,” he said.

“The holding company is expected to be listed next fiscal,” he added

When asked about the valuation of SBI Life, Mr Bhatt said that investment bankers had pegged the value at $7 billion.

SBI is also in talks with domestic and foreign partners for its proposed foray in non-life insurance, which is likely to be finalised in the next two to three months.

ICICI Financial Services is valued at Rs 44,000 crore.

Apart from the holding company, SBI is also looking at entering new business areas like wealth management by next year.

The bank also plans to set up independent business in the areas of merchant acquisition, payment solutions, private equity, infrastructure fund, venture capital, financial planning and pension funds management.

SBI is among the four entities shortlisted by Pension Fund Regulatory and Development Authority to conduct the business.

The bank plans to beef up its treasury operations and find partners for offering high-end structured products and services for its corporate clients.

More Stories on : Public Sector Banks | Restructuring | Asset Management Companies | Life Insurance | State Bank of India

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