SBI to pare stake in general insurance venture to 51%
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Mumbai: State Bank of India (SBI) will dilute its stake in its general insurance joint venture—SBI General Insurance—to 51% from 76% in favour of its existing partner Insurance Australia Group (IAG), the lender said in a notice to exchanges on Thursday.
The move comes after Parliament voted on 12 March to allow foreign investors to raise their stakes in domestic insurance joint ventures to 49% from the earlier permitted limit of 26%.
“...the executive committee of the central board has today (on Thursday) decided to initiate the necessary action as per JV (joint venture) agreement for dilution of SBI’s stake in SBI General Insurance from 76% to 51% with corresponding increase of stake of IAG from 26% to 49%, including appointment of a valuer to facilitate valuation and price discovery,” the lender said in its notice.
SBI could be in the process of diluting its stake in its life insurance venture as well, Bloomberg news agency had reported on 20 March. While SBI did not comment, SBI’s life Insurance venture partner BNP Paribas had said they were open to the idea of increasing stake in the insurance venture.
In a 22 December interview with Mint, SBI’s chief Arundhati Bhattacharya had said the bank was looking at reducing its stake in various subsidiaries. Subsequently on 10 March, SBI said it has sold 4%, of its total 10% stake, in credit information company Credit Information Bureau India Ltd (Cibil) for Rs.72 crore.
“We have a lot of subsidiaries which are of very good value. Insurance is there, we have a card subsidiary that is doing exceedingly well, mutual funds subsidiary is there, investment banking arm. We can always unlock that value by listing them, but then I have to take other people along and see what they want to do. Listing would be preferred to unlock the value than exiting them,” Bhattacharya had told Mint.
At 9.50am, shares of SBI were trading at Rs.262.50 apiece on the BSE, down 1.07%. The benchmark BSE Sensex was trading at 27,904, down 0.76%.
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