The life insurance sector of India has seen one of the biggest deals of the recent times, wherein the Carlyle Group, a world famous privately managed equity firm, has acquired 9% stake in the SBI Life Insurance Company Limited from the BNP Paribas Cardif SA. As per the closing stock price of the SBI Life Insurance Company on the 01st of March’2019, the stake of 9% is worth approximately Rs.5, 500 crores.
The shares of SBI Life were up by 5.47% and closed at Rs.612.25. Before this deal, the last big deal in the life insurance sector was in 2018 August, wherein Madison Capital, Rakesh Jhunjhunwala, and Consortium of West bridge Capital agreed to acquire Star Health and Allied Insurance Company Limited at approximately Rs.6, 000 – 6, 500 crores.
Sunil Kaul, head and managing director (South-East Asia) of buyout advisory team of Carlyle Asia said that the Indian life insurance industry has substantial growth potential and the reason for the same is favorable demographics of the country and improved focus of the people on monetary savings.
Following this, the French insurance provider BNP Paribas and Carlyle now hold 12.8% and 9% stake of SBI Life Insurance Company, respectively and State Bank of India remains the major shareholder in this association with 62.1% stake.
Sanjeev Nautiyal, Chief Executive and Managing Director of SBI Life say that they are very much delighted to have Carlyle as one of their shareholders and the trust of this global organization on SBI group would for sure strengthen and enhance the status of SBI Life in Indian life insurance industry.
BNP Paribas was looking out to sell some part of its stake in SBI Life Insurance since September 2018. This sale of the stake was the part of the moment for bringing down the stakes held by the main promoter of the life insurance company to at least 75% according to the law of SEBI. This rule is for the listed companies wherein it is mandatory to have minimum public shareholding of 25% in three years of the listing.
The SBI Life Insurance Company became public on 2017 September through Initial Public Offering (IPO) with two promoters – BNP Paribas and SBI. Both these companies collectively sell the stake of 12%, wherein BNP Paribas sells 4% and SBI sells 8%. The IPO at that time valued the company at Rs.70, 000 Crore.
Apart from this, the True North acquired a good stake in the health insurer Max Bupa Health Insurance Company Limited for approximately Rs.500 crore.
Last year, the Royal Sundaram Company sold its 40% stake to Ageas Insurance NV for Rs.1, 520 crores. Other PE company Warburg Pincus Llc has acquired a stake of 26% in India First Life Insurance Company Limited for approximately $100 million in June of the last year.