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LIC reduces 2.14% stake in Tata Global Beverages, sells 1.35 crore shares
18-Jul-2017 (15:42)
SBI Life Insurance files DRHP for IPO to raise Rs 7,000 crore
18-Jul-2017 (09:39)

SBI Life Insurance, a joint venture (JV) between the State Bank of India (SBI) and BNP Paribas Cardif, filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (Sebi), the capital markets regulator, for an initial public offering (IPO) of equity shares, on Monday.

The two JV partners are planning to sell up to 120 million shares of a face value Rs 10 each through an offer for sale, which will help them garner well over $1 billion (about Rs 7,000 crore).

The SBI, the country's largest bank, is selling up to an 8 per cent stake, or 80 million shares, in the unit as part of the IPO. BNP Paribas group is selling up to 4 per cent (40 million shares).

According to the offer document, the SBI holds 70.1 per cent and BNP Paribas 26 per cent in the life insurance company. Value Line Pte. Ltd, an affiliate of KKR Asian Fund L.P., and MacRitchie Investments Pte. Ltd., an indirect wholly owned subsidiary of Temasek Holdings (Private) Ltd, hold a 1.95 per cent stake each in SBI Life, which they had purchased in around December 2016 for Rs 1,794 crore, valuing SBI Life at Rs 46,000 crore.

On December 9, 2016, the SBI informed the Bombay Stock Exchange that the Executive Committee of the Central Board (ECCB) of the bank had approved divesting 39 million equity shares, constituting 3.9 per cent in SBI Life Insurance Company, at Rs 460 per share, subject to regulatory approvals.

However, since then, market valuations have changed. For instance, on December 9, 2016, ICICI Prudential LifeÆs market capitalisation was pegged at about Rs 42,500 crore.

Its share price has since risen 61 per cent and market capitalisation stood at Rs 68,000 crore at Monday's close. Extrapolating from this, SBI Life could be now worth about Rs 74,000 crore. Consequently, a 12 per cent stake sale through an offer for sale by the two major stakeholders could fetch them more than Rs 8,800 crore or $1.38 billion.

The prospectus filed with Sebi did not mention how much the IPO would raise. But investment bankers had previously confirmed it would likely raise more than $1 billion. This being an offer for sale by promoters and since no new shares are being issued, the proceeds of the IPO will not go to the life insurance company but to the promoters.

The process of listing is expected to be completed before December. The proceeds would help the SBI to bolster its capital adequacy ratio (CAR) to meet regulatory norms and support business growth, bankers said.

Axis Capital, BNP Paribas, Citi, Deutsche Bank, ICICI Securities, JM Financial, Kotak Investment Banking, and SBI Capital Markets are managing the issue.

SBI Life will be the second life insurer to go public after ICICI Prudential Life Insurance.

SBI Life, in a statement, said its embedded value was Rs 16,537.9 crore as of March 31, 2017, based on the Embedded Value Report issued by the independent actuary. Its profit after tax increased from Rs 814.8 crore in FY15 to Rs 954.6 crore in FY17.
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