State Bank of India (SBINSE -0.58 %) will monetise thousands of crores of rupees from its decades-old investments in insurance, cards and investment advisory businesses in the next two years as it aims to raise its capital buffer and provide an exit route to investors in these firms.
The lender, the country’s biggest by assets, will list its general insurance business and the debit and cards businesses, and seek an investor for its investment banking unit, SBI Capital Markets Ltd, said Rajnish Kumar, Chairman, SBI.
SBI General Insurance may be listed in fiscal 2020: SBI Cards, which boasts of Carlyle as an investor, may also list in 2019-20. These divestments could lead to gains of thousands of crores for the state-run bank. When it listed its life insurance company, SBI Life, the bank reaped Rs 5,600 crore from the share sale.
“We will look to sell 3-4 per cent stake in the general insurance arm this year,” said Dinesh Khara, MD SBI. “After this, we will come up with an IPO next year. Also, we are looking for partners in SBI Caps. We will list SBI Cards in FY 20 after the process of merging the back office with the front is completed.”
The stake sale in general insurance is likely to happen by the end of the current year.
SBI General is a joint venture between SBI and Insurance Australia Group. While SBI holds 74 per cent stake in the JV, the rest is with IAG.
The stake sale will be largely for shareholders to unlock value. Its gross written premium rose by 36 per cent to Rs 3,545 crore in 2017-18 compared to the previous fiscal.
Valuation of general insurance companies is based on gross written premium, profitability and net worth.
SBI General could be valued at Rs 12,000 crore. It has net worth of Rs 1,500 crore and share capital of Rs 212 crore.
