SBI Life to raise USD1.3 bn from IPO

India’s SBI Life Insurance Co. plans to raise as much as INR84 billion (USD1.30 billion) in what could be the largest initial public offering in the south Asian nation in seven years.

The share sale of SBI Life — a joint venture between the nation’s biggest lender State Bank of India and France’s BNP Paribas Cardiff – will help propel India’s IPO market to a record this fiscal year. Private and state-owned insurers including HDFC Life and National Insurance Co. are also set to tap the stock market later this year. ICICI Lombard, a unit of ICICI Bank, is set to open its INR57 billion IPO soon.

SBI is selling 80 million shares, or an eight percent stake, in the venture while BNP Paribas offloads four percent, or 40 million shares. The starting price of the IPO is set at INR685 to INR700 a share, valuing the company at about INR700 billion.

SBI chairman Arundhati Bhattacharya said the bank aims to “unlock the capital” it has invested in the life insurance unit through the IPO. The Mumbai-based lender aims to use the proceeds to provide for the massive bad debt on its books, she said.

After the IPO, SBI’s stake in the company will be reduced to 62.1 percent from 70.1 percent now, while BNP Paribas’ holding will come down to 22 percent from 26 percent.