State Bank of India has decided to sell 3.9 per cent stake in its subsidiary SBI Life Insurance Company Ltd (SBI Life) for ₹1,794 crore ($264 million).

A bank statement said 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 it.

This is the second major divestment in the insurance segment after the Centre raised the maximum permissible shareholding of foreign investors in insurance companies from 26 per cent to 49 per cent. ICICI Bank had also sold a small stake in its life insurance subsidiary last year.

On Friday, the Executive Committee of the Board of SBI approved the sale of 3.9 crore shares of ₹10 each. The proposed transaction values SBI Life at ₹46,000 crore (at ₹460 per share).

Upon completion of the transaction, SBI will hold 70.1 per cent stake in SBI Life, while its joint venture partner, BNP Paribas Cardif, will continue to hold 26 per cent, the statement said.

SBI Chairman Arundhati Bhattacharya said, “The partnership with KKR and Temasek is a recognition of the efforts of SBI Life’s commitment to create a high-quality institution which is a leader in the private Indian Life Insurance space.” “Moreover,” she added, “this transaction values SBI Life at ₹46,000 crore, reflecting significant value creation since its inception in 2001.”

SBI Life earned ₹7,107 crore and ₹4,640 crore of new business premium during FY2016 and H1FY2017, respectively. The company has a 22 per cent private sector market share in terms of new business premium.

Last year, following the increase in the foreign investment cap, ICICI Bank sold 6 per cent stake in ICICI Prudential Life Insurance Company at a company valuation of ₹32,500 crore.

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