SBI LIFE’S PUB­LIC OF­FER NEXT WEEK

The shares that will be­gin trad­ing on Oc­to­ber 3 will be sold in a price range of `685-700 apiece to raise as much as `84 bil­lion

Financial Chronicle - - FRONT PAGE - DEVIDUTTA TRIPATHY & S ANURADHA

SBI Life In­sur­ance will next week launch what will be In­dia’s first bil­lion-dol­lar ini­tial pub­lic of­fer­ing since 2010, pav­ing the way for a record-set­ting year for IPOs in the coun­try. SBI Life, a unit of top In­dian lender State Bank of In­dia (SBI), will open the share sale to the pub­lic on Septem­ber 20 and close it on Septem­ber 22, ac­cord­ing to a fil­ing.

SBI Life In­sur­ance will launch next week what will be In­dia’s first bil­lion-dol­lar ini­tial pub­lic of­fer­ing since 2010, pav­ing the way for a record-set­ting year for IPOs in the coun­try. SBI Life, a unit of top In­dian lender State Bank of In­dia (SBI), will open the share sale to the pub­lic on Septem­ber 20 and close it on Septem­ber 22, ac­cord­ing to a fil­ing.

The shares, that will be­gin trad­ing on Oc­to­ber 3 will be sold in a price range of Rs 685-700 apiece, rais­ing as much as Rs 84 bil­lion ($1.3 bil­lion) for SBI Life’s main share­hold­ers - SBI and BNP Paribas Cardif - which are par­ing their stakes.

Strong stock mar­kets have fu­elled a surge in eq­uity deals in Asia’s third­largest econ­omy, with IPO pro­ceeds so far this year crossing $3 bil­lion. While last year’s $4 bil­lion fundrais­ing from IPOs is set to be sur­passed, some ex­pect pro­ceeds to even top the record $8.5 bil­lion raked in seven years ago.

High in­flows in­clud­ing from retail in­vestors into eq­uity mar­kets are driv­ing sec­tors that his­tor­i­cally never listed in In­dia to ex­plore IPOs, said Arun Ke­jri­wal, founder of Ke­jri­wal Re­search & In­vest­ment Ser­vices. “This au­gurs well for the cap­i­tal mar­kets. How­ever a note of cau­tion: val­u­a­tions are steep,” Ke­jri­wal added.

SBI Life’s IPO, the third in­surer to list in the coun­try, will be the biggest since state-run Coal In­dia’s Rs 155 bil­lion ($2.4 bil­lion) IPO in 2010. ICICI Lom­bard Gen­eral In­sur­ance’s IPO to raise up to $890 mil­lion opens on Fri­day, while HDFC Stan­dard Life In­sur­ance is ex­pected to hit the mar­kets in com­ing weeks with what is likely to be an­other bil­lion-dol­lar of­fer­ing.

That will be fol­lowed by two other big in­surer list­ings - state-run rein­surer Gen­eral In­sur­ance Corp of In­dia (GIC Re) and non-life in­surer New In­dia As­sur­ance, es­ti­mated to raise a to­tal of more than $3 bil­lion.

While the in­sur­ers are bet­ting on lower pen­e­tra­tion and ris­ing in­come lev­els bol­ster­ing de­mand for their prod­ucts, the govern­ment’s plan to pare its stake in five state-run gen­eral in­sur­ers through IPOs is also go­ing to drive of­fer­ings.

In the SBI Life IPO, SBI is sell­ing up to an 8 per cent stake, while BNP Paribas Cardif is sell­ing up to 4 per cent. The two cur­rently own 70 per cent and 26 per cent, re­spec­tively.

The IPO price range val­ues the in­surer at about $11 bil­lion, ver­sus the $7 bil­lion val­u­a­tion at which SBI sold a nearly 4 per cent stake to KKR and Te­masek in De­cem­ber.

The list­ing comes at a time when In­dian banks, in­clud­ing the SBI, need bil­lions of dol­lars to make higher pro­vi­sions for record soured as­sets and meet stricter global bank­ing reg­u­la­tions known as Basel III by March 2019.

Basel III, de­signed to avoid a rep­e­ti­tion of the 2008 fi­nan­cial cri­sis, in­clude tighter cap­i­tal re­quire­ments. PTI adds: Mean­while, SBI Life In­sur­ance on Wed­nes­day said the com­pany will fo­cus on pro­tec­tion prod­ucts, in­clud­ing crit­i­cal ill­ness.

"Re­cently, we had launched a 'Sam­poorn Can­cer Surak­sha', which is a crit­i­cal care prod­uct. Go­ing for­ward, we are plan­ning to bring out more pro­tec­tion prod­ucts, in­clud­ing crit­i­cal care plans," SBI Life In­sur­ance Man­ag­ing Di­rec­tor and CEO Arijit Basu told re­porters in Mum­bai.

The cap­i­tal re­quire­ment is ad­e­quate and we will not re­quire any more funds for the next three years. This is pure di­vest­ment,” Basu added. SBI Life, which holds 20 per cent mar­ket share of the pri­vate life in­sur­ance busi­ness in the coun­try, will more or less main­tain 50:50 bal­ance of mar­ket-linked and tra­di­tional prod­uct port­fo­lio. State Bank of In­dia chief Arundhati Bhat­tacharya, who was present on the oc­ca­sion, said the funds raised will go back to the pro­mot­ers. “The cap­i­tal raised will go back to the pro­mot­ers. This will en­hance SBI's brand name and pro­vide liq­uid­ity to the ex­ist­ing share­hold­ers,” she added.

When asked about list­ing of other sun­sidiaries, Bhat­tacharya said, SBI will not take that long to un­lock value of any other sub­sidiaries. “Yes we have taken 23 years to come back to the mar­ket again. But I can as­sure you it won't take that long for the next of our off­spring to come to the mar­ket,” she added.

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.