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SBI sells 4% in SBI General to Axis AMC and Premji Invest

Sep 26, 2018, 07.14 PM IST
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Mumbai: State Bank of India sold 4% stake in SBI General Insurance for Rs 482 crores to Axis New Opportunities Fund and Premji Invest, valuing the company ar around Rs 12,000 crore.

The bank board today approved the sale of 86.2 lakh shares of Rs 10 each. Axis New Opportunities AIF – I represented through its investment manager Axis AMC Ltd. will purchase 1.65% and PI Opportunities Fund – I, an AIF of Premji Invest will purchase 2.35% stake from SBI in the general insurance company.

After completion of the transaction, SBI will hold 70% stake in SBI GI while its joint venture partner, IAG International Pty Ltd., will continue to hold 26%.

“Insurance segment is still young and nascent in India, it is a highly under penetrated market, we foresee a significant scope of growth for SBI GI to achieve size, scale and profitability. We shall continue to extend our support and are excited about SBI GI’s bright journey ahead,” said Rajnish Kumar, Chairman, SBI.

Kotak Mahindra Capital Company Limited acted as the financial advisor for the transaction and J. Sagar Associates is the legal advisor for the transaction.

“SBI GI, due to its superior performance and robust standing, attracted immense interest from marquee investors and is evident from the record timeline within which the deal got consummated,” said Kaushal Shah executive director Kotak Mahindra Capital Company. “It also highlights that investors are keen to participate in differentiated stories overlooking market volatility and valuing the fundamental strength and long-term potential of the companies.”

SBI GI, 7th largest general insurer with gross direct written premium of Rs 3,500 crore has grown at CAGR of 36% between FY13 and FY18.

SBI General Insurance Company, which began its operations in 2010, is a 74:26 joint venture between the State Bank of India and Insurance Australia Group (IAG).

The company had doubled its profit last year. It had reported profit of Rs 396 crore in FY 2017-18 as against Rs 153 crore in the previous year. The company had one-time income which boosted the underwriting profit last year. Without the one time income, combined ratio, a measure of profitability fell to 106% compared to 113% in the previous tear.

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