State Bank of India shares gained more than 1 percent intraday Tuesday after the central board of directors approved dilution of bank's stake in its life insurance subsidiary.
The country's largest lender is going to dilute stake in life insurance business through an initial public offer.
Once it lists on exchanges, SBI Life Insurance would become the second insurer after ICICI Prudential Life to go public.
"The executive committee of the central board of the bank at a meeting held on Monday, accorded the final approval for divestment of SBI's stake in SBI Life through an IPO," SBI said in an exchange filing.
Last Friday, the Insurance Regulatory and Development Authority of India (IRDAI) approved SBI Life's Rs 7,000 crore IPO application, making it the largest share sale by a life insurer in the country. But the company is awaiting the final approval from the markets watchdog Sebi.
Pending all the approvals from all regulators, the board has decided to go ahead with the share sale of up to 8 crore equity shares, the price of which will be fixed later in consultation with selling shareholders-the parent SBI, and the foreign partner BNP Paribas Cardiff, the filing said.
SBI Life has hired BNP Paribas, Citi, Kotak Investment Bank and Axis Capital to manage the initial share sale.
SBI Life is a joint venture between State Bank and BNP Paribas Cardiff in which SBI holds 70.1 percent and BNP Paribas Cardiff 26 percent.
The company is expected to file draft share sale documents with the Sebi in the next few weeks.
SBI Life is the second largest private life insurer after ICICI Prudential.
SBI Life's net profit grew 10.9 per cent to Rs 954.65 crore in the year to March 2017 from Rs 861.03 crore in the previous year.
At 11:08 hours IST, the stock price was quoting at Rs 287.35, up Rs 1.80, or 0.63 percent on the BSE.Posted by Sunil Shankar Matkar