It was largely known that the State Bank of India (SBI) was selling some stake in its life insurance subsidiary. But, the deal for sale of 3.9% stake in this business for Rs 1,794 crore, announced Friday after market hours, has surprised many.
This deal values SBI Life Insurance Company (SBI Life) at Rs 46,000 crore, making it the most valued private life insurance firm, pending the HDFC Life-Max Life merger. The latest valuation is also much ahead of analysts’ recently revised valuation estimates ranging Rs 32,000 to Rs 39,000 crore. These valuation estimates of SBI Life were revised upwards by analysts in August this year when the bank for the first time disclosed the embedded value (EV) of SBI Life.
Embedded value is calculated by adding the adjusted net asset value and the present value of future profits of a firm and is a measure of shareholders’ interest in the covered business of a company. The embedded value stood at Rs 12,999 crore as on 31 March, 2016, ahead of analysts’ estimates of Rs 8,000 to Rs 10,000 crore back then. This deal thus will boost SBI’s sum of the parts (SOTP) valuations for the second time this year.
Arundhati Bhattacharya, chairman, SBI, said, “The partnership with KKR and Temasek is a recognition of the efforts of SBI Life’s commitment to create a high quality institution which is a leader in the private Indian life insurance space. Moreover, this transaction values SBI Life at Rs 46,000 crore, reflecting significant value creation since its inception in 2001.”
The deal involves sale of 39 million shares at Rs 460 apiece. SBI said the bank’s Executive Committee of the Central Board has approved divestment of this stake, to private equity players. An investment vehicle affiliated with KKR-managed funds and an affiliate of Temasek, the Singapore-based Investment Company, will each purchase 19.5 million shares of SBI Life from SBI. Upon completion of the transaction, SBI will hold 70.1% stake in
SBI Life while its joint venture partner, BNP Paribas Cardif, will continue to hold 26%.
Looking for investment in Share Market, CapitalStars Financial Research Private Limited provides you best investments Tips in Share Market.It daily provides intraday and Future calls.We generate intraday as well as delivery calls in Stock cash and F&O in NSE & BSE, Commodities.
Share Market Tips
* Investment & trading in securities market is always subjected to market risks, past performance is not a guarantee of future performance.
* CapitalStars Investment Adviser: SEBI Registration Number: INA000001647
0 comments:
Post a Comment