SBI Life Insurance Company, India’s largest private life insurer, is planning to raise around Rs 8,400 crore from its initial price offering (IPO). The company has set a price band of Rs 685-700 per share for its IPO, and when calculated at the upper band of the issue price, the company will be valued at around Rs 70,000 crore.
SBI Life Insurance company had a market share of 20% in new business premiums in the last financial year among private life insurance companies. HDFC Life and ICICI Prudential Life Insurance had a market share of 17.2% and 15.5% respectively in new business premium for last fiscal. The IPO is scheduled to open on September 20 and close on September 22. The listing is scheduled on October 3.
The company has proposed an offer for sale up to 12 crore equity shares of face value of R10 each. The IPO comprises of an OFS up to 8 crore equity shares by promoter selling share holder State Bank of India and up to 4 crore equity shares by BNP Paribas Cardif.
The offer constitutes 12% of the post offer equity share capital, which will include 8% by The State Bank of India (SBI) and 4% by BNP Paribas Cardif. SBI will get Rs 5,600 crore selling 8 crore equity shares, while BNP Paribas Cardif will fetch Rs 2,800 crore for its 4 crore shares. For the shareholders of SBI, 10 % of the issue is reserved and 20 lakh equity shares are reserved for the employees of SBI Life Insurance Company.
Bids can be made for a minimum of 21 equity shares and multiples of 21 thereof.
“SBI has taken 23 years to come back to the market again and I can assure that it won’t take that long to other offspring to come to the market. SBI life insurance company has the lowest miss-sell ratio at 0.2 in the entire market and our aim is to make it 0.0,” said Arundhati Bhattacharya, chairman of SBI.
Established as a joint venture between the State Bank of India and BNP Paribas Cardif in 2001, SBI Life Insurance company is India’s largest private life insurer in terms of New Business Premium generated in each fiscal year since 2010. Currently, SBI holds 70.1% in SBI Life, while BNP Paribas Cardif has 26% and remaining 3.9% is owned by KKR and Temasek Holdings. So now 12% is being offloaded and after IPO, SBI and BNP Paribas Cardif will hold 62.1% and 22% respectively.
In December last year, SBI Life had sold 3.9% of stake to KKR and Temasek Holdings for Rs 1,800 crore, pegging its value at Rs 46,000 crore. Embedded value of SBI Life at March 2016 was Rs 13,000 crore which increased to over Rs 16,538 crore at the end of 2016-17.
“In the last two financial years FY15 to FY 17, we have gained 4 % new business premium. In Individual weightage premium our market share gain is 20.7 % at the end of FY17,” said Arijit Basu, MD and CEO of SBI Life Insurance.