SBI to revalue SBI Life for later stake sale to JV partner

After agreeing to a deal to sell 3.9% stake in SBI Life Insurance, its JV with BNP Cardiff

After agreeing to a deal to sell 3.9 per cent stake in SBI Life Insurance, its joint venture with BNP Cardiff, a French financial group, State Bank of India will begin the process for re-valuation of the arm, for a plan to sell  a further 10 per cent stake to the partner.

A senior SBI executive said the deal with KKR and Temasek gave a benchmark to carry out the re-valuation of SBI Life, for possible sale of the additional stake to the French entity. The bank has already held many rounds of discussions with BNP Cardiff.  It is also aiming to conclude the transaction before an Initial Public Offer (IPO) of equity for the life insurance entity, which would then list on the stock exchanges. SBI Life Managing Director Arijit Basu had said the IPO announcement could be made at the close of 2016-17.

SBI sold the 3,9 per cent stake (39 million shares) at Rs 460 a share. It is expected to get Rs 1,794 crore from the transaction with KKR and Temasek. Once that is through, SBI will hold 70.1 per cent stake in SBI Life; BNP Paribas Cardif will continue to hold 26 per cent stake, the SBI executive said.

The transaction had valued SBI Life at Rs 46,000 crore. The Embedded Value (present value of future profits plus adjusted net asset value) was Rs 13,000 crore for March 2016. SBI Life reported a net profit of Rs 428 crore for the first half of the current financial year (April-September), an increase of five per cent over the same period last year. 

This was aided by strong growth in total New Business Premium, up 77 per cent to Rs 4,644 crore. Renewal Premium grew 26 per cent to Rs 3,715 crore. 

As on September 30, the total of Assets Under Management touched Rs 87,784 crore, as against Rs 74,554 crore last year, said the company. Life’s Individual New Business Premium (APE) rose 54 per cent to Rs 2,069 crore for the six-month period ended September, while the sectoral average rise was 18 per cent in the same period. 

The market share in APE was 20 per cent among private life insurers.