SBI rules out further stake dilution in SBI Life before IPO

State Bank of India (SBI) today ruled out further stake dilution in its life insurance arm before the the proposed initial public offering that is likely to to happen over the next 12-18 months.
"We want to retain 50.1 per cent control in SBI Life Insurance even after the IPO. So, there is no likelihood of any further stake dilution before the share sale, which I hope should be completed over the next 12-18 months," SBI chairperson Arundhati Bhattacharya said.
She was talking to reporters after inaugurating an over 76,000 sqft Central Processing Center of SBI Life, at the sprawling Seawoods Grand Central suburban railway station-cum-mall in Navi Mumbai. The centre can seat at least 800 people.

It can be noted that despite a board mandate to dilute 5 per cent stake in the life insurance arm, SBI had sold only 3.9 per cent stake in SBI Life to global private equity major KKR and the Singaporean sovereign fund Temasek Holdings for for Rs 1,794 crore or USD 264 million, on December 5, valuing the third largest private life insurer at around Rs 46,000 crore.
However, Bhattacharya today said, by the time the company is ready for the IPO, SBI Life will be the most valued private sector life insurer, ahead of the present leaders HDFC-Max and ICICI Prudential.

Explaining the reason for no further stake dilution in the run-up to the IPO, she said, SBI is planning to divest 10 per cent through the share sale process and expects the French partner to do so.

When asked whether the French partner is interested in hiking the stake to 49 per cent, she said they are in discussion over the same.
SBI Life is a joint venture between SBI and BNP Paribas Cardif of France. Post the transactions, SBI stake would come down to 70.1 per cent from current 74 per cent and BNP Paribas Cardif will continue to hold 26 per cent.

Both KKR and Temasek picked up 1.95 per cent each from the deal, while the board had initially approved 5 per cent pre-IPO dilution.
Asked whether the merger of the five associate banks will be completed as planned by March end, Bhattacharya answered in the positive.
On whether cash supply will increase after December 30, she said normalisation will not happen in a day or two and that she does not expect before one-two months.
"Currency supply normalisation will be gradual," the chairperson said.