CPPIB, GIC among anchor investors in SBI Life's offering

Sovereign and pension funds, PE firms and insurance firms lap 60% of IPO shares; mutual funds take the rest

SBI Life Insurance Company has raised Rs 2,226 crore ($346 million) from anchor investors, including Canada Pension Plan Investment Board (CPPIB) and the sovereign wealth funds of Singapore, Abu Dhabi, Kuwait and Norway. 

The insurer, a joint venture between State Bank of India and BNP Paribas Cardif, sold 31.8 million shares to a bunch of anchor investors at Rs 700 each, ahead of its initial public offering of equity (IPO) which opened on Wednesday and will close on Friday.

CPPIB took 2.24 million shares (7.05 per cent of those allotted to anchor investors). Singapore wealth fund GIC Pte bought almost 2.1 mn (4.9 per cent). Aranda Investments, a unit of GIC’s sister company, Temasek, purchased about 1.4 mn. Abu Dhabi Investment Authority, Kuwait Investment Authority and the Norwegian government's Pension Fund Global also bought shares. The anchor investors included several foreign ones such as BlackRock, among the biggest global asset fund managers, which took 5.45 per cent through multiple funds. A bunch of mutual funds (MFs) and insurance companies were among the other investors. A total of 49 schemes from 14 MFs took nearly 40 per cent of the shares on offer. 

HDFC Mutual Fund was the largest investor, taking 7.64 per cent of shares, followed by CPPIB (7.05 per cent). Among MFs, ICICI Prudential was the second largest, taking 6.74 per cent of the shares on offer for anchor investors. 

SBI Life is selling shares in a price band of Rs 685-700 and will raise as much as Rs 8,400 crore ($1.3 billion). Anchor investors are investing at the top end of the band. 

“At Rs 700, the issue is offered at 4.2 times its embedded value of Rs 16,538 crore. This is a little higher than 3.8 times for ICICI Prudential. We believe the premium valuation for SBI is justified, due to its higher incremental market share gain. Hence, we recommended investors to subscribe to the issue with a long-term perspective,” went a note by Angel Broking.

The entire IPO comprises an offer for sale by State Bank of India and BNP Paribas. The public issue comprises a sale of 120 million shares, representing a 12 per cent stake dilution on a post-offer basis. SBI is selling 80 m shares worth Rs 5,600 crore, while BNP is selling the remaining shares worth Rs 2,800 crore. 

SBI owns 70.1 per cent stake; BNP holds 26 per cent. After the IPO, the promoter holding in SBI Life will drop from 96 per cent to 84 per cent. This is the biggest IPO in India after state-run Coal India’s Rs 15,500-crore share sale in 2010. 

SBI Life is India’s second largest life insurer in the private sector, after ICICI Prudential Life Insurance, which went public last year.

IPO subscribed 10% on 1st day 

The Rs 8,400-crore initial public Offering of equity from SBI Life Insurance garnered 10 per cent subscription on Wednesday, first day of the issue. The institutional investor portion was subscribed six per cent, the wealthy investor portion got one per cent and the retail (small investor) part was subscribed 16 per cent, according to stock exchange disclosures.