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SBI Life Insurance gains a tad on trading debut after $1.3 bn IPO

03 October, 2017

SBI Life Insurance Company Ltd made a positive start on the stock exchanges on Tuesday, with its shares closing 1.1% higher than the price at which the company floated India’s biggest initial public offering (IPO) in seven years.

Shares of India’s second-largest life insurer in the private sector began trading on the BSE at Rs 733.30 apiece, up 4.75% from the issue price of Rs 700. The shares traded between Rs 702.25 and Rs 738 before closing at Rs 708 apiece, stock-exchange data showed.

The BSE’s 30-share benchmark Sensex rose 0.7%.

The closing share price values SBI Life at Rs 70,800 crore ($10.8 billion). This is higher than the Rs 59,291 crore market value of ICICI Prudential Life Insurance Company, the only other listed life insurer in India. ICICI Prudential had floated its IPO in September last year, receiving bids for 10.5 times the shares on offer. Its shares had slumped on their trading debut, but have gained almost 39% since then. The shares climbed 6% on Tuesday.

SBI Life is among a bunch of insurance companies that have floated or are preparing to launch their IPOs. ICICI Lombard General Insurance Co Ltd floated its IPO last month while state-run reinsurer General Insurance Corp of India and non-life insurer New India Assurance Co Ltd have also filed for initial share sales.

SBI Life’s public offering was covered 3.7 times thanks to strong participation from institutional investors, though demand from retail and high net-worth individuals was low.

The IPO, the biggest in India since state-run Coal India Ltd’s share sale in 2010, raised Rs 8,400 crore ($1.3 billion) for SBI Life parent State Bank of India and Dutch joint venture partner BNP Paribas Cardif.

The public issue comprised a sale of 120 million shares, representing a 12% stake dilution on a post-offer basis. State Bank of India, India’s biggest bank, sold 80 million shares while Cardif sold the remaining.

The SBI board had given in-principle approval to initiate the process of floating an IPO of its life insurance arm in March. SBI Life had filed its draft IPO proposal with the Securities and Exchange Board of India on 17 July. The capital markets regulator cleared the IPO on 4 September.

JM Financial Institutional Securities, Axis Capital, BNP Paribas and Citigroup were among the eight merchant bankers managing the IPO. The others were Deutsche Equities India, ICICI Securities, Kotak Mahindra Capital Company and SBI Capital Markets.

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SBI Life Insurance gains a tad on trading debut after $1.3 bn IPO

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