Thursday, September 27, 2018

State Bank of India Approves Sale of 4% Stake in SBI General Insurance

State Bank of India (SBI) at its Executive Committee meeting of the Board held today approved the sale of 86.2 lac shares of INR 10 each, equaling to 4% stake in its subsidiary SBI General Insurance Company Limited (SBI GI) for INR 482 crores (~US$ 66 mn).  Axis New Opportunities AIF – I represented through its investment manager Axis AMC Ltd. and PI Opportunities Fund – I, an AIF of Premji Invest, will purchase 1.65% and 2.35% stake respectively from SBI. The proposed transaction values SBI GI at over INR 12,000 crores. The transaction completion is subject to regulatory approvals.

Upon completion of the transaction, SBI will hold 70% stake in SBI GI while its joint venture partner, IAG International Pty Ltd., will continue to hold 26%.

Rajnish Kumar, Chairman, SBI said, “State Bank of India happily welcomes Axis New Opportunities AIF and Premji Invest as our incoming partners in SBI GI. Insurance segment is still young and nascent in India, it is a highly under penetrated market, 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, “We are delighted to welcome Axis New Opportunities AIF and Premji Invest as incoming investors of SBI GI. SBI GI has a high quality management team having an institutional framework with systems and processes in place. This is demonstrated through consistent high growth and positive underwriting results. This transaction values SBI GI at around INR 12,000 crores reflecting significant value creation within 7 years of business operations.”

Pushan Mahapatra, MD & CEO said, “SBI GI is the fastest growing general insurance company in the private sector. Company is just 7 years into operations and has already achieved sizeable scale, making it the 7th largest private general insurance player as at end of June 2018. Company follows a robust multi-channel distribution model encompassing Auto manufacturers, Brokers, Agency, Direct and has been the top bancassurance non-life insurers in the country. Company is present in every district of the country through its own branches, branches of SBI and RRBs with access to 29,500+ branches. Company has wide and comprehensive product bouquet meeting needs of customers in every segment. SBI GI has a very balanced product mix with robust and unique risk based pricing and risk management framework. 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”

Kaushal Shah, Executive Director, Kotak Mahindra Capital Company Limited said, “The transaction showcases the strength of the SBI franchise and their ability to create market leading businesses. SBI GI, due to its superior performance and robust standing, attracted immense interest from marquee investors and is evident from the record timeline within which the deal got consummated. It also highlights that investors are keen to participate in differentiated stories overlooking market volatility and valuing the fundamental strength and long term potential of the companies.”

Kotak Mahindra Capital Company Limited acted as the financial advisor for the transaction and J. Sagar Associates is the legal advisor for the transaction.

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