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SBI Calls off Plans to List General Insurance Joint Venture

Published On Sep 20, 2019, Updated On Oct 26, 2020

The State Bank of India has ditched plans to introduce an initial public offering (IPO) for its general insurance joint venture SBI General. 

SBI’s Chairman Rajnish Kumar informed that there is no extra capital needed so the bank has dropped its old plan to list the general insurance joint venture, as reported by the PTI.  

Going by a recent estimation, SBI General is worth more than Rs.120 billion, i.e. $1.67 billion. The largest government bank in India, SBI was making plans to list SBI General Insurance in fiscal 2021.  

A joint venture formed by SBI and IAG (Insurance Australia Group) in the year 2010, SBI General has 74% of the holding, whereas AIG owns 26%. IAG looks to exit the joint venture completely. As a result, there are six private equity funds shortlisted to acquire 26% stake in it. These are-ChrysCapital, Carlyle, Premjilnvest, GIC of Singapore. The expected value of the transaction is Rs. 30 billion ($419.5 million) approximately.

As selected, Goldman Sachs, an American investment banker will oversee the divestiture process. 

SBI has also recently planned to divest a maximum of 4.5% stake in SBI Life Insurance, its insurance joint venture, to raise a maximum of Rs. 34.65 billion. Following the divestment, the SBI's holding in the SBI Life will decrease from 62.1% to 57.6%.

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