LEH:
The largest lender State Bank has dropped its plan to take its general insurance arm public as there is no need for additional capital now, chairman Rajnish Kumar has said.
Investor interest for its cards business is very high, and SBI Card listing will happen in the March quarter, he said.
The bank was earlier looking for an IPO for SBI General Insurance in FY21.
When asked if the IPO for general insurance will happen next fiscal, Kumar replied in the negative, saying there is no need for capital.
SBI General, valued at over Rs 12,000 crore recently, is a joint venture between SBI and Insurance Australia Group(IAG) with a 26 per cent ownership which is planning to exit the joint venture fully.
On the additional stake sale in SBI Life, Kumar explained that the bank is required to offload an additional 2 per cent stake as per the Sebi norms, but has time till October 2020 to execute the same.
Six private equity funds including PremjiInvest, Carlyle, ChrysCapital and GIC of Singapore, are among those in the shortlist for picking up a 26 per cent stake in SBI General Insurance that will cost the acquirer about Rs 3,000 crore.
The stake sale by IAG will value SBI General Insurance at Rs 12,000 crore. Goldman Sachs is running the process and the deal is likely to be announced shortly, said the people cited above.
About the SBI Card IPO, he said the feelers from investors suggest that they are excited to invest in the company.
The IPO will be launched in the January-March quarter of the current fiscal and based on the valuation arrived at, SBI will take a call on the stake sale, he said.
SBI owns 74 per cent in the cards venture, while its foreign partner can also choose to dilute its stake through the IPO (initial public offering), Kumar said.
The SBI plans to sell up to 3.5 crore equity shares (3.5 per cent of the total paid-up equity) in its insurance arm on September 12-13, as per SBI Life Insurance Company's exchange filing.
SBI plans to raise up to Rs 3,465 crore by offloading up to 4.5 per cent stake in SBI Life to comply with the minimum public shareholding norms.
The floor price for the share sale has been fixed at Rs770 per equity share. It should be noted that the promoter and promoter group have a total shareholding of 67.30 percent in the life insurance company, in which SBI holds 62.10 percent and BNP Paribas Cardiff has 5.20 percent.