SBI Life retail portion undersubscribed, garners just 16% on weak market

OFS sails through successfully in heavt institutional investor support; Shares of SBI Life end at Rs 745.5 on Monday, down 0.74%

The retail portion of SBI Life Insurance Company’s offer for sale (OFS) garnered just 16 per cent subscription amid weakness in the secondary market. 

Retail investors–those applying for shares worth up to Rs 200,000—bid for just 331,070 shares as against 2.1 million on offer. Shares of SBI Life on Monday ended at Rs 745.5, down 0.74 per cent. 

The base price for the OFS was set at Rs 725 per share. Despite shortfall in retail demand, the OFS has sailed through successfully as the institutional investor portion had seen two times demand the shares on offer. Investment bankers said the unsubscribed retail portion will go to institutional investors. On Friday, institutional investor bids had exceeded 38.6 million shares as against 18.9 million shares on offer. Through the OFS, promoter State Bank of India (SBI) has raised over Rs 1,500 crore by paring 2.1 per cent stake.

SBI Life joins a series of blue-chip firms including peer HDFC Life in successfully concluding large share sales. The SBI Life share sale is being handled by SBI Cap Securities, HSBC and Nomura.

Market players said several large investors subscribed to both SBI Life and HDFC Life's share sales given the sector's long-term prospects.

“We believe the Indian life insurance industry is in a phase of high growth and lower penetration will ensure that the growth remains higher for next couple of years. SBI Life, with its strong brand name and wide distribution network, is one of the best plays for Indian Life Insurance industry. Further, historically, insurance products have seen growth post-pandemic scenario. We believe SBI Life will continue to gain market share considering its bancassurance strength and operational efficiency,”said Jaikishan Parmar, senior equity research analyst, Angel Broking.