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SBI to sell 3.9% stake in life insurance arm to KKR, Temasek for $265 mn

12 December, 2016

Singapore state investment firm Temasek Holdings and private equity giant KKR & Co. will buy into SBI Life Insurance Company in a deal that will make the State Bank of India unit the nation’s most valued insurer.

State Bank of India, the nation’s largest lender, said in a stock-exchange filing on Friday that it will sell a 3.9% stake in SBI Life for Rs 1,794 crore ($265 million). It didn’t give any details.

SBI Life CEO and managing director Arijit Basu told CNBC-TV18 news channel that KKR and Temasek, through their affiliate firms, will acquire a 1.95% stake each in the insurer.

The deal, which is subject to regulatory clearances, values SBI Life at Rs 46,000 crore. This is higher than the Rs 42,291 crore market valuation of ICICI Prudential Life Insurance Company, the first insurer in India to go public, based on Friday’s closing.

Temasek also has a stake in ICICI Prudential which it had bought a year ago.

The CNBC-TV18 report also cited KKR India CEO Sanjay Nayar as saying that there are exciting growth opportunities for Indian insurers as a result of increasing middle-class savings and rapid urbanisation.

After the sale, SBI’s stake in the insurer will decline to 70.1% from 74%. Its joint venture partner, BNP Paribas Cardiff, will continue to hold a 26% stake in the company.

The deal comes at a time when SBI Life is looking to go public. Earlier this month, the Press Trust of India cited Basu as saying that the insurer might float its initial public offering next year and that it might sell a 5% stake to test market response.

SBI Life is one of India’s top three private-sector life insurance companies. ICICI Prudential, a joint venture of ICICI Bank and Prudential Plc, and HDFC Standard Life Insurance Company Ltd, a joint venture of mortgage lender Housing Development Finance Corp. and the UK-based Standard Life Plc, are the other top private-sector life insurers. 

HDFC Standard Life is merging with Max Life to create the largest private insurer in the country. This firm will be separately listed.

India’s crowded life insurance industry has 24 companies and the sector is dominated by state-run Life Insurance Corporation.

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SBI to sell 3.9% stake in life insurance arm to KKR, Temasek for $265 mn

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