The State Bank of India (SBI) has informed the stock exchanges that its board is looking to sell 4 per cent of its existing shareholding in SBI General Insurance to a non-promoter entity through small parcel share sale (SPSS). SBI General, formed in 2010, is a joint venture between SBI and the Insurance Australia Group.
Once the sale is complete, SBI’s stake in its general insurance arm will come down to 70 per cent from 74 per cent. IAG has a 26 per cent shareholding in the company. The move could be construed as an exercise in price discovery ahead of the launch of its initial public offering (IPO).
Pushan Mahapatra, managing director and chief executive officer, in recent interviews has said that they plan to launch the issue during FY20, and that preparations for the offering would require 12-15 months. Mahapatra also had said that IAG has expressed an interest to increase its stake in the joint venture.
The company has 111 branches across the country, about 95 of which are in urban areas. Given that the SBI is the country's largest bank, the general insurer has managed to capitalise on vast banking network, selling insurance products to customers across the country without needing to invest in 'brick and mortar' outlets.