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State Bank of India (SBI) is planning to cut its stake in its life-insurance venture with BNP Paribas Cardif, in a move that would raise the French partner's holding to 49 per cent, said people familiar with the matter.
The reduction would precede an initial share sale in SBI Life Insurance Co - 74 per cent-owned by SBI - that might happen in the financial year starting April 1, the people said, asking not to be identified as the information is private. BNP Paribas Cardif is interested in raising its stake and will discuss terms, Lilian Goh, a Hong Kong-based spokeswoman for parent BNP Paribas SA, said in an email.
The move comes after Parliament voted on March 12 to increase the amount foreign investors can own in the nation's insurers to 49 per cent from 26 per cent. While majority ownership and control in the joint ventures will remain with resident Indians, the Bill allows overseas companies to expand their presence in the world's second most populous country.
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The sources didn't disclose whether SBI would sell shares to BNP Paribas Cardif or whether the French insurer would make additional investments in SBI Life to raise its 26 per cent stake. The venture had net income of Rs 620 crore in the nine months to December 31, according to the filings.
M K Rekhi, a Mumbai-based spokesman for SBI, didn't immediately respond to phone calls and an email seeking comment.
Insurance Australia Group Ltd (IAG), SBI's partner in SBI General Insurance Co, wants to raise its stake in the venture, though it hasn't yet decided to what level, the people said. The Sydney-based company owns 26 per cent of the venture.
"Clearly we've flagged that we'd be keen to increase our stake," Amanda Wallace, a spokeswoman for IAG, said by phone Friday. "We are in discussions to that effect. It's just too early to say at this point in time. We are absolutely interested and we are talking to them."
The insurance Bill, which requires presidential assent to become law, could lure about Rs 20,000 crore ($3.2 billion) of investment, SBI Chairman Arundhati Bhattacharya said last week.
