The State Bank of India (SBI), the country’s largest lender, on Wednesday said it will raise up to Rs 3,465 crore by selling up to 4.5 per cent stake in its insurance arm SBI Life Insurance Company, subject to requisite approvals.
“The Executive Committee of Central Board (ECCB) of State Bank of India (SBI) in its meeting held today i.e., September 11,2019 has accorded approval for divestment of 3,50,00,000+1,00,00,000 equity shares constituting 3.5% with an oversubscription up to 1% of its stake in SBI Life,” the lender said in a filing to the Bombay Stock Exchange on Wednesday.
The floor price for the stake sale has been fixed at Rs 770 per equity share, a 3.73 per cent discount over Wednesday’s closing price. Shares of SBI Life Insurance Company closed day’s trade at Rs 798.75, down 1.13 per cent.
The stake sell will consist of a base issue of selling 3.5 crore equity shares (representing 3.5 per cent of the total issued and paid-up equity share capital of SBI Life) with an option to additionally sell up to 1 crore (or 1 per cent) paid up equity share of SBI Life.
The public sector lender is offloading stake to achieve the minimum public shareholding of 25 per cent (part of bank’s share of MPS) through offer, as per the regulatory prescription, SBI said.
“The seller (SBI) proposes to sell up to 3.5 crore equity shares, in aggregate representing 3.5 per cent of the total issued and paid-up equity share capital of the company (SBI Life Insurance) on September 12, 2019 for non-retail investors and on September 13, 2019 for retail investors and for non-retail investors who choose to carry forward their un-allotted bids,” SBI said in a regulatory filing.
As of June 30, 2019, SBI was the majority shareholder with 62.1 per cent stake in SBI Life Insurance.
Earlier in June this year, BNP Paribas Cardif, the joint venture partner in private life insurance company SBI Life, offloaded 2.5 per cent equity stake in the life insurance company through an offer for sale (OFS) on the bourses. Post stake sale, BNP Paribas Cardif’s stake in SBI Life declined to 5.2 per cent. In March, it had sold 5 per cent shares while in the same month, Carlyle Group had acquired 9 per cent stake in the life insurer from BNP Paribas Cardif.