State Bank of India (SBI) has decided to divest up to 10 per cent stake in its life insurance arm SBI Life.
“The executive committee of the central board has authorised divestment of SBI’s stake in SBI Life Insurance by up to 10 per cent,” SBI said in a statement.
SBI Life Insurance is a joint venture between SBI and BNP Paribas Cardif of France. At present, SBI owns 74 per cent of the total capital and BNP Paribas Cardif has the remaining 26 per cent.
As SBI will be selling its stake, the proceeds will come to the bank as the promoter. SBI Life Insurance has an authorised capital of Rs 2,000 crore and a paid-up capital of Rs 1,000 crore. However, it’s not clear whether the bank will sell the stake to BNP Paribas or a listing through an IPO.
Earlier this month, Parliament had passed the Insurance Laws (Amendment) Bill, 2015 which seeks to increase foreign investment in private sector companies to 49 per cent from the existing 26 per cent, among other things.
Last week, SBI said it will dilute its stake in its general insurance venture SBI General to 49 per cent in favour of its foreign partner, with the enactment of insurance legislation. Insurance Australia Group (IAG) of Australia currently owns 26 per cent of SBI General Insurance, with SBI holding 74 per cent.
After the deal, SBI’s stake in the venture will fall to 51 per cent, it said. The company pegs a total premium of Rs 1,600 crore by March 2015 as compared to Rs 1,200 crore premium registered in the FY14 financial year.
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