State Bank of India will divest 3.9 per cent of its stake in SBI Life Insurance Company to global investment firms KKR and Temasek for Rs 1,794 crore ($264 million). This deal values SBI Life Insurance Company (SBI Life) at Rs 46,000 crore, making it the most valued private life insurance firm.
SBI said the executive committee of the central board in its meeting on Friday approved to divest 3.9 per cent stake, or 3,90,00,000 equity shares of the life insurance subsidiary, at a price of Rs 460 per share. “An investment vehicle affiliated with KKR-managed funds, and an affiliate of Temasek, the Singapore-based investment company, will each purchase 1.95 crore shares from SBI,” the country’s largest lender said in a release.
“The partnership with KKR and Temasek is a recognition of the efforts of SBI Life’s commitment to create a high quality institution. Moreover, this transaction values SBI Life at Rs. 46,000 crore, reflecting significant value creation since its inception in 2001,” SBI chairman Arundhati Bhattacharya said.
SBI owns 74 per cent stake in SBI Life while BNP Paribas Cardif has the remaining 26 per cent. “Upon completion of the transaction, SBI will hold 70.1 per cent stake in SBI Life while its joint venture partner, BNP Paribas Cardif, will continue to hold 26 per cent,” SBI said.
Arijit Basu, MD & CEO of SBI Life, said, “The company look forward to an enriching association to support SBI Life’s continued growth, sustainable profitability and contribution to our policyholders’ progress.” Kotak Mahindra Capital Company and SBI Capital Market acted as exclusive financial advisors for the transaction.
SBI Life is also gearing-up to float initial public offer in 2017. Earlier in October, SBI announced to off load up to 5 per cent of its stake in SBI Life to a non-promoter group. It had also offered to shed 10 per cent stake to its JV partner at a right price.