SBI mulls share sales in insurance, asset-management units

Mumbai: State Bank of India (SBI), the country’s largest lender, is considering share sales in its insurance and asset-management units to meet tighter capital requirements.

“We are in talks with our joint-venture partners regarding the listing of the insurance units,” chairman Arundhati Bhattacharya said in an interview at her office in Mumbai on 25 July. The lender is also in discussions with Paris-based Amundi Asset Management, which holds a stake in SBI Funds Management Pvt. Ltd, for a potential equity issue, she said without elaborating as a final decision has yet to be made.

With the plan, SBI is set to join companies including KKR and Co. Lp-backed Cafe Coffee Day and Lodha Developers Pvt. Ltd that are looking to tap stock markets for funds after India’s benchmark share indexes surged to records this month. The bank needs to raise more than Rs.80,000 crore ($13.3 billion) of additional equity capital by 2019 to comply with international standards laid out by the so-called Basel III regulatory regime.

SBI raised Rs.10,000 crore in January by selling shares to the government and institutional investors to bolster its capital adequacy ratio, in accordance with Basel III guidelines, to 12.44% as of 31 March.

SBI raised Rs.10,000 crore in January by selling shares to the government and institutional investors to bolster its capital adequacy ratio, in accordance with Basel III guidelines, to 12.44% as of 31 March.

Government-controlled State Bank owns 74% of the capital in SBI Life Insurance Co. Ltd, with BNP Paribas Cardif SA holding the remainder. The lender has a stake in SBI Funds Management with Amundi Asset, and SBI General Insurance Co. Ltd, a joint venture with Insurance Australia Group Ltd.

Shares of SBI gained 42% this year, after slumping 26% in 2013. The S&P BSE Bankex, a gauge of 12 lenders, climbed 35% in 2014.

International investors have poured more than $12 billion into Indian stocks this year amid expectations a new government under Prime Minister Narendra Modi will spur growth in Asia’s third-largest economy. The S&P BSE Sensex Index has jumped 23% in 2014, making it the best performer among benchmark gauges in the 10 biggest stock markets.

Initial public offerings in India have raised Rs.139 crore this year after falling to a decade low in 2013, data compiled by Bloomberg show.