Decision on stake dilution likely in Q1 of FY18: SBI Life

SBI Life Insurance Company, a joint venture between State Bank of India (SBI) and BNP Paribas Cardif, will decide on stake dilution by the end of the first quarter of FY18, a senior official said on Wednesday. 

“We are considering an initial public offering (IPO)…. the matter is under discussion. The final decision will be taken, most probably, in the first quarter of the next financial year. We are talking with BNP Paribas Cardif,” said Arijit Basu, managing director and chief executive officer of SBI Life Insurance.

He added discussions were on about who would dilute what percentage of shareholding. After that SBI Life Insurance will begin the regulatory process for IPO. It will conduct a fresh valuation of the company. Basu, however, indicated SBI Life Insurance may dilute 10 per cent or more stakes. 

SBI had sold 3.9 per cent to KKR and Temasek at Rs 460 a share in December last year. At that time the company’s valuation was Rs 4,600 crore. The recent stake dilution has reduced SBI’s share from 74 per cent to 70.1 per cent in the company.

Earlier, SBI had indicated to sell its non-core investments to decrease bad assets. 

Basu said, “SBI Life Insurance is not a non-core asset for SBI and the bank is not considering to sell its insurance business.”

The company will increase the number of insurance agents from the current 90,000 to 100,000 in the next financial year, to strengthen its retail agency business. Currently, of the total business, about 60 per cent comes from bank and the rest comes from retail agency. 

In the first nine months of the current financial year, premium growth stood at 40 per cent. While the industry grows at 20-22 per cent, SBI Life's market share has increased to 22.9 per cent, from 17 per cent last year.