MUMBAI: State owned banker State Bank of India will sell off 3.9 per cent of its stake in insurance arm SBI Life Insurance Company to global investment firms KKR and Temasek for Rs 1,794 crore ($264 million). The bank received approval from the Executive Committee of the Central Board in its meeting on Friday to divest 3,90,00,000 equity shares of the life insurance subsidiary at a price of Rs 460 per share.
“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 country’s largest bank said.
Meanwhile, the deal has put the valuation of the insurance firm at over Rs 45,000 crore.
“The partnership with KKR and Temasek is a recognition of the efforts of SBI Life’s commitment to create a high quality institution. Moreover, this transaction values SBI Life at Rs 46,000 crore, reflecting significant value creation since its inception in 2001,” SBI Chairman Arundhati Bhattacharya said.
SBI owns 74 per cent stake in SBI Life while BNP Paribas Cardif has the remaining 26 per cent. “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,” said the bank.
The valuation aspect of the deal is good news for the firm, considering that it is also gearing-up to float initial public offer in 2017. Earlier in October, SBI announced to off load up to 5 per cent of its stake in SBI Life to a non-promoter group and had also offered to shed 10 per cent stake to its JV partner if given the right price. ICICI Prudential Life was valued at Rs 32,500 crore when ICICI Bank sold a 6% stake in ICICI Prudential to Wipro Chairman Azim Premji and the Singapore government’s investment company Temasek in November last year.
SBI Life’s total gross written premium stood at Rs 15,825 crore and shares of SBI closed 2.41 per cent up at Rs 266 on BSE.