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The Executive Committee of State Bank of India’s board, on Wednesday, approved the sale of 4 per cent stake in its subsidiary, SBI General Insurance Company (SBI GI), for ₹482 crore (about $66 million).
SBI GI is the seventh-largest private general insurance player in the country.
Axis New Opportunities AIF – I, represented through its investment manager Axis AMC, and PI Opportunities Fund – I, an AIF of Premji Invest, will purchase 1.65 per cent and 2.35 per cent stake, respectively, from SBI, the bank said in a statement.
The proposed transaction, involving sale of 86.2 lakh shares of ₹10 each, values SBI GI at over ₹12,000 crore. The transaction completion is subject to regulatory approvals.
Upon completion of the transaction, SBI will hold a 70 per cent stake in SBI GI, while its joint venture partner, IAG International Pty Ltd, will continue to hold 26 per cent.
Rajnish Kumar, Chairman, SBI, said: “The insurance segment is still young and nascent in India, it is a highly under-penetrated market, and we foresee a significant scope of growth for SBI GI to achieve size, scale and profitability. We shall continue to extend our support and are excited about SBI GI’s bright journey ahead.”
Dinesh Khara, MD, Global Banking and Subsidiaries, said: “SBI GI has a high-quality management team having an institutional framework with systems and processes in place. This transaction values SBI GI at around ₹12,000 crore, reflecting significant value creation within seven years of business operations,” he added.
SBI GI model
SBI GI follows a multi-channel distribution model encompassing auto manufacturers, brokers, agency, direct and bancassurance.
It has presence in every district through its own branches, branches of SBI, and regional rural banks with access to 29,500-plus branches.
Pushan Mahapatra, MD & CEO, said: “We are glad to partner with Axis New Opportunities AIF and Premji Invest and look forward to an enriching association to support SBI GI’s continued growth and sustainable profitability.”
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