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SBI Life Insurance files for IPO to raise Rs 7,000 crore

JV partners plan to sell up to 120 mn shares of a face value Rs 10 each through offer for sale

Abhijit Lele  |  Mumbai 

IPO, IPOs

Life Insurance, a joint venture (JV) between the State Bank of India (SBI) and Cardif, filed its draft red herring prospectus with the Securities and Exchange Board of India (Sebi), the capital markets regulator, for an initial public offering (IPO) of equity shares, on Monday.


The two JV partners are planning to sell up to 120 million shares of a face value Rs 10 each through an offer for sale, which will help them garner well over $1 billion (about Rs 7,000 crore).

The SBI, the country’s largest bank, is selling up to an 8 per cent stake, or 80 million shares, in the unit as part of the group is selling up to 4 per cent (40 million shares). 

According to the offer document, the holds 70.1 per cent and 26 per cent in the life company. Value Line Pte. Ltd, an affiliate of KKR Asian Fund L.P., and MacRitchie Investments Pte. Ltd., an indirect wholly owned subsidiary of Temasek Holdings (Private) Ltd, hold a 1.95 per cent stake each in Life, which they had purchased in around December 2016 for Rs 1,794 crore, valuing Life at Rs 46,000 crore.

On December 9, 2016, the informed the Bombay Stock Exchange that the Executive Committee of the Central Board (ECCB) of the bank had approved divesting 39 million equity shares, constituting 3.9 per cent in Life Company, at Rs 460 per share, subject to regulatory approvals.

However, since then, market valuations have changed. For instance, on December 9, 2016, Life’s market capitalisation was pegged at about Rs 42,500 crore.

Its share price has since risen 61 per cent and market capitalisation stood at Rs 68,000 crore at Monday's close. Extrapolating from this, Life could be now worth about Rs 74,000 crore. Consequently, a 12 per cent stake sale through an offer for sale by the two major stakeholders could fetch them more than Rs 8,800 crore or $1.38 billion.

The prospectus filed with did not mention how much the would raise. But investment bankers had previously confirmed it would likely raise more than $1 billion. This being an offer for sale by promoters and since no new shares are being issued, the proceeds of the will not go to the life company but to the promoters.

The process of listing is expected to be completed before December. The proceeds would help the to bolster its capital adequacy ratio (CAR) to meet regulatory norms and support business growth, bankers said.

Axis Capital, BNP Paribas, Citi, Deutsche Bank, ICICI Securities, JM Financial, Kotak Investment Banking, and Capital Markets are managing the issue.

Life will be the second life insurer to go public. Life (ICIR.NS) listed on the stock exchanges last year. HDFC Life, another insurer which is also going public, has selected bankers for its proposed offering. Last week, ICICI Lombard General Co Ltd filed for an in what is the first initial share sale by a non-life company in India.

Life, in a statement, said its embedded value was Rs 16,537.9 crore as of March 31, 2017, based on the Embedded Value Report issued by the independent actuary. Its profit after tax increased from Rs 814.8 crore in FY15 to Rs 954.6 crore in FY17.


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