On Thursday, State Bank of India the country’s largest lender said that they are going to sell 2.10 percent stake or 2.1 crore worth shares in State Bank of India Life insurance Co Ltd through an offer of sale. At the end of March 2020, the public sector holds a 57.60 percent stake in the company. The offer for sale issue will be opened for non-retail investors on June 12, whereas June 15, retail as well as non-retail investors can participate in the issue. Investment bank Nomura is advising SBI on the share sale.
In a statement to the exchanges, SBI said, its board has given a nod to divest 2.1 percent stake in SBI Life to achieve minimum public shareholdings of 25 percent (remaining part of the bank’s share for minimum public shareholdings), through an offer for sale.
For the day, the share price of SBI Life Insurance closed 0.20 percent down at Rs 741.45. On the other hand, SBI settled 5.64 percent down at Rs 177.20. The share price declined 2 percent in early trade on June 12 as a promoter is selling a stake in the company. According to the Securities and Exchange Board of India (SEBI) listing norms, promoters have three years from the date of listing to bring down holding to 75 percent. If the stake goes past 75 percent because of acquisition such as open offer or delisting, promoters get one more year to bring down the stakes. According to SEBI norms, SBI Life’s promoter shareholding is well below the minimum threshold. From the beginning of the year, shares of SBI and SBI Life have fallen 47 percent and 23 percent respectively against a fall of 19 percent in the benchmark index, Sensex. From the March lows, SBI and SBI Life gained 18 percent and 43 percent, while Sensex gained 31 percent.
Last year in June, BNP Paribus Cardiff trimmed its shareholding in the life insurer by selling 2.5 percent stake. On a standalone basis, SBI’s net profit flow more than four times to Rs 3,580.81 crore for the quarter ended 31 March against Rs 838.40 for the same quarter last year.
