The initial public offering (IPO) of SBI Life Insurance, which began on Wednesday, was subscribed 0.09 times, with investors bidding for 83.67 lakh shares of the 8.82 crore shares on offer. The IPO, through which the country’s largest private life insurer is looking to raise about Rs 8,400 crore, received bids for 13.27 lakh shares from qualified institutional buyers, of their quota of 2.12 crore shares. High-net-worth individuals bid for 2.03 lakh shares of the 1.59 crore shares reserved for them, bidding 0.01 times. Retail investors bid for nearly 0.16 times or 58.39 lakh shares of the 3.71 crore shares reserved. Employees who were reserved 20 lakh shares bid for 3.56 lakh shares. SBI shareholders who were reserved 1.2 crore shares bid for 6.40 lakh shares.
SBI Life on Tuesday raised Rs 2,226 cr from 69 anchor investors. SBI Life Insurance 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 had a market share of 20% in new business premiums in 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 company has proposed an offer for sale up to 12 crore equity shares of face value of Rs 10 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. 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.
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 the end of March 2016 was Rs 13,000 crore which has increased to over Rs 16,538 crore at the end of financial year 2016-17. Total assets under management of SBI Life stood at Rs 97,737 crore in last financial year, while company earned net profit of Rs 955 crore in FY2017, up from Rs861 crore in FY2016.
The size of the Indian life insurance industry is Rs 4.2 lakh crore on a total-premium basis as of fiscal 2017. In terms of total premium, the Indian life insurance industry is the 10th largest market in the world and the fifth largest in Asia. New premium constituted 42% of the total premium as of fiscal 2017. The industry’s assets under management (AUM) grew at a compound annual rate (CAGR) of 19% during fiscal 2001 to fiscal 2017 to Rs 30 lakh crore.
India’s life insurance penetration stood at 2.7% in 2016, compared with 4.4% in 2010. Among Asian countries, life insurance penetration in Thailand, Singapore and South Korea were at 3.7%, 5.5%, and 7.4%, respectively, in 2016. Hence this suggests the untapped potential of the Indian life insurance market.