State Bank of India (SBI) on Wednesday decided to offload 4% of its stake in SBI General Insurance, its general insurance arm, for Rs 482 crore to an alternative investment fund promoted by Axis AMC and Premji Invest.
Post this transaction, SBI General Insurance will be valued at around Rs 12,000 crore.
The initial public offering (IPO) of SBI General Insurance is due in the coming financial year.
The stake has been sold to Axis New Opportunities AIF – I represented through its investment manager Axis AMC and PI Opportunities Fund – I, an AIF of Premji Invest at 1.65% and 2.35% stake respectively from SBI.
Upon completion of the transaction, SBI will hold 70% stake in SBI GI while its joint venture partner, IAG International, will continue to hold 26%.
Valuations of general insurers is based on the book value and SBI General Insurance’s book value at the end of June quarter stood at at around Rs 1,600 crore.
Pushan Mahapatra, MD & CEO of SBI General Insurance said, “The company is just seven years into operations and has already achieved sizeable scale, making it the 7th largest private general insurance player as at end of June 2018.
The company follows a robust multi-channel distribution model encompassing auto manufacturers, brokers, agency, direct and has been the top bancassurance non-life insurers in the country. We have wide and comprehensive product bouquet meeting needs of customers in every segment. SBI GI has a very balanced product mix with robust and unique risk based pricing and risk management framework. We are glad to partner with Axis New Opportunities AIF and Premji Invest and look forward to an enriching association to support SBI GI’s continued growth and sustainable profitability.”
Data from the Insurance Regulatory and Development Authority of India (Irdai) showed that SBI General Insurance has underwritten gross direct premium at Rs 1,571.52 crore upto August this year as against `1,155.66 crore in the previous financial year, representing a growth of over 36%. Its market share as on July stands at 2.51%.
The New India Assurance is the leader in the non-life space with market share of 14.84%, while ICICI Lombard is top among the private non-life insurer with market share of 9.54 % as on August 2018. In the last financial year, net profit of SBI General Insurance stood at `396 crore, while its combined ratio was at 96.4%.