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MUMBAI: Five investment banks including Kotak Investment Bank, ICICI Securities, JM Financial, Edelweiss and EY are looking to participate in the stake sale process of SBI General where SBI is looking to sell 4 per cent before the IPO expected by end of the fiscal year.
The stake sale in general insurance is likely to happen by the end of the current year.
“We are in the process of finalising a banker and the process has to be completed within a week,” said Dinesh Khara State Bank of India.
“We are selling 4 per cent stake for price discovery.
SBI General has wiped out losses and it is the right time to do a deal.”
ICICI Prudential, HDFC Life, SBI Life and ICICI Lombard General had sold a token stake to discover value before the listing on the exchanges.
The stake sale will be largely for shareholders to unlock value.
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).
In December 2016, IAG had exercised an option to raise its stake to 49 per cent in the next two years.
IAG paid Rs 542 crore for a 26 per cent stake in the joint venture, which started in 2010.
Its gross written premium rose by 36 per cent to Rs 3,545 crore in 2017-18 compared to the previous fiscal.
Valuation of general insurance companies is based on gross written premium, profitability and net worth.
In recent listings, investors have given them a multiple of eight times to book and three times the gross written premium.
Going by ICICI Lombard’s market capitalisation of Rs 35,000 crore, SBI General could be valued anywhere between Rs 11,000 crore and Rs 13,000 crore.
