SBI looks to cut stake in life insurance venture by end of next year

Montreal: State Bank of India (SBI) expects to complete a deal that would reduce its stake in a life-insurance venture with BNP Paribas Cardif to 49% by the end of next year, chairman Arundhati Bhattacharya said.

SBI owns 74% of SBI Life Insurance Co., as the venture is called, and BNP Paribas Cardif holds the rest. The two will soon begin the process of valuing the company, so it’s too early to say how much the stake might fetch, and whether BNP Paribas Cardif will increase its ownership or an initial public offering (IPO) will take place, Bhattacharya said.

“Cardif is quite keen to see what we can do in order either for them to come in, or to go for an IPO,” she said on Tuesday in an interview in Montreal. “A maximum of 12 to 18 months is what we are looking at.”

The Parliament voted on 12 March to increase the amount foreign investors can own in the nation’s insurers to 49% from 26%. While majority ownership and control in the joint ventures will remain with resident Indians, the bill allows overseas companies to expand their presence in the world’s second-most populous country.

BNP Paribas Cardif, a unit of France’s biggest bank, indicated in March that it’s interested in raising its stake in the insurer. SBI Life Insurance had net income of Rs.620 crore in the nine months to 31 December, according to a regulatory filing.

SBI is also cutting its 74% ownership in SBI General Insurance Co., a venture it runs with Insurance Australia Group Ltd. A deal allowing the Australian insurer to buy an additional stake should be completed “in a matter of months,” said Bhattacharya, who was in Canada for the Economic Forum of the Americas.

“They have already exercised their option for dialing up” the stake to as much as 49%, she said of Insurance Australia. “There is no question of IPOing that company. That company is doing well, but it’s still not broken even.”

State Bank of India