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BNP Paribas Cardiff launches mega share sale in SBI Life Insurance; deal may mark French insurer's exit from the two-decade-old JV

On December 4, 2020, Moneycontrol was the first to report that BNP Paribas Cardiff was evaluating the sale of its balance stake in SBI Life Insurance via a block deal.

March 10, 2021 / 07:15 PM IST
BNP Paribas holds 5.2 percent stake in SBI Life Insurance which is valued at Rs 4,888 crore at current market price.

BNP Paribas holds 5.2 percent stake in SBI Life Insurance which is valued at Rs 4,888 crore at current market price.

 
 
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BNP Paribas Cardiff has launched a share sale in SBI Life Insurance which could potentially signal the exit of the French insurance giant from the state-owned insurer and mark the end of a nearly two-decade-old joint venture, sources with knowledge of the matter told Moneycontrol.

SBI Life Insurance was set up in 2001 as a joint venture between State Bank of India and BNP Paribas Cardiff. It debuted on the domestic bourses in October 2017.

On December 4, 2020, Moneycontrol was the first to report that BNP Paribas Cardiff was evaluating the sale of its balance stake in SBI Life Insurance via a block deal.

“BNP Paribas has launched the block deal today,” an individual told Moneycontrol. A second individual confirmed the same.

According to the current shareholding pattern, the French firm, which falls in the promoter category, holds 5.2 percent stake which is valued at Rs 4,888 crore at current market price. The SBI Life Insurance stock had hit 52-week high earlier this week after registering a strong growth in new business premiums in February.

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Both the individuals above spoke to Moneycontrol on the condition of anonymity. Moneycontrol could not immediately connect with BNP Paribas Cardiff and SBI Life Insurance for an immediate comment.

According to the terms of the deal accessed by Bloomberg, BNP Paribas is selling 35 million (or around 3.5 percent) SBI Life Insurance shares which are being offered at Rs 870 to Rs 917 each. This represents a 2.5 percent to 7.5 percent discount to MArch 9’s closing price of Rs 940.75.

There is an option to increase the deal size by about 15 million shares (1.5 percent) and BNP Paribas is the sole broker on the deal. If the upsize option is exercised, then BNP Paribas would be left with a miniscule 0.2 percent stake.

The BNP Paribas-SBI Life Saga

BNP Paribas, which is a specialist in personal insurance and had gross written premiums of 29.8 billion euros in 2019 has been gradually paring its stake in SBI Life Insurance over the last few years.

In June 2019, BNP Paribas Cardiff had offloaded 2.5 percent stake in SBI Life Insurance for about Rs 1,625 crore. Earlier, In March 2019, it had sold 5 percent and 9.2 percent for Rs 2,889 crore and Rs 4,751 crore, respectively, in the life insurer.

Commanding an individual market share of 11.7 percent, by the end of the first half of this fiscal year, SBI Life Insurance is a market leader and has recently seen an improvement in business premium, policy retention and the ULIP business.

An earlier report by brokerage firm Motilal Oswal had said: “We expect SBI Life Insurance to continue to deliver good persistency and renewal growth. At the same time, it should maintain its cost leadership.”

BNP Paribas Cardiff is a leading global player in bancassurance partnerships and creditor insurance. It co-creates solutions with almost 500 partner distributors in a variety of sectors (including banks and financial institutions, automotive sector companies, retailers, telecommunications companies, energy companies, among others), as well as financial advisors and brokers who market the products to their customers.

It has a presence in 33 countries and strong positions in three regions – Europe, Asia and Latin America.
Ashwin Mohan
first published: Mar 10, 2021 07:14 pm

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