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SBI Life to launch India's first billion-dollar IPO in seven years

Reuters  |  MUMBAI 

By Devidutta Tripathy and S. Anuradha

(Reuters) - Co will launch next week what will be India's first billion-dollar initial public offering since 2010, paving the way for a record-setting year for IPOs in the country.

Life, a unit of top Indian lender State (SBI), will open the share sale to the public on Sept. 20 and close it on Sept. 22, according to a filing.

The shares, that will begin trading Oct. 3 will be sold in a price range of 685-700 rupees apiece, raising as much as 84 billion rupees ($1.3 billion) for Life's main shareholders - and BNP Paribas Cardif - which are paring their stakes.

Strong stock markets have fuelled a surge in equity deals in Asia's third-largest economy, with proceeds so far this year crossing $3 billion. While last year's $4 billion fund-raising from IPOs is set to be surpassed, some expect proceeds to even top the record $8.5 billion raked in seven years ago.

High inflows including from retail investors into equity markets are driving sectors that historically never listed in to explore IPOs, said Arun Kejriwal, founder of Kejriwal Research & Investment Services.

"This augurs well for the capital markets. However a note of caution: valuations are steep," Kejriwal added.

Life's IPO, the third insurer to list in the country, will be the biggest since state-run Coal India's 155 billion rupee ($2.4 billion) in 2010.

ICICI Lombard General Co's to raise up to $890 million opens on Friday, while HDFC Standard is expected to hit the markets in coming weeks with what is likely to be another billion-dollar offering.

That will be followed by two other big insurer listings - state-run reinsurer General Corp of (GIC Re) and non-insurer New Assurance Co, estimated to raise a total of more than $3 billion.

While the insurers are betting on lower penetration and rising income levels bolstering demand for their products, the government's plan to pare its stake in five state-run general insurers through IPOs is also going to drive offerings.

In the IPO, is selling up to an 8 percent stake, while BNP Paribas Cardif is selling up to 4 percent. The two currently own 70 percent and 26 percent, respectively.

The price range values the insurer at about $11 billion, versus the $7 billion valuation at which sold a nearly 4 percent stake to KKR and Temasek in December.

The listing comes at a time when Indian banks, including the SBI, need billions of dollars to make higher provisions for record soured assets and meet stricter global banking regulations known as Basel III by March 2019.

Basel III, designed to avoid a repetition of the 2008 financial crisis, include tighter capital requirements.

($1 = 63.9725 Indian rupees)

(Reporting by Devidutta Tripathy and S. Anuradha; Editing Susan Fenton and Himani Sarkar)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, September 13 2017. 14:27 IST