SBI Life OFS comprises sale by BNP Paribas Cardif of 2.5 crore shares of SBI Life Insurance through the offer for sale (OFS) route at a floor price of Rs 650 apiece, a 8.5 per cent discount to its last closing price ahead of the OFS announcement. Through the SBI Life OFS, BNP will raise about Rs 1650 crore. The SBI Life OFS offer opened on June 25 for non-retail investors and shall be open on June 26 for retail investors.
About SBI Life OFS ( SBI Life Insurance OFS)
|Issue Period||25-06 and 26-06-2019|
|Selling Share holder||BNP Paribas Cardif|
|MP a Day before||710.45|
|% Discount of Floor Price||9.30%|
|Offer Size (shares)||2,50,00,000|
|Offer in Rs. Crore||1,625|
|offer Size Non retail- Shrs||2,25,00,000|
|offer Size Non retail- Rs. Cr.||1462.5|
|offer Size Retail- Shrs||25,00,000|
|offer Size Non retail- Rs. Cr.||162.5|
Clearing Price of Rs 675.50 fixed for Non Retail Bidding in SBI Life Insurance Company Ltd. This is the minimum bid price at which Retail shall be eligible for allotment. CMP is Rs. 680 at NSE.
OFS Allocation Methodology
Retail investor shall mean individual investor places bids for Sale
Shares of total value of not more than Rs. 2,00,000/- (Rupees Two Lacs
only) aggregated across the Stock Exchanges (“Retail Investor”).
No discount is being offered to Retail Investors. 10% of the Sale Shares shall be reserved for Retail Investors subject to
the receipt of valid bids (the “Retail Category”). The Stock Exchanges
will decide the quantity of Sale Shares eligible to be considered in the
Retail Category, based on the Floor Price (defined below). Unsubscribed portion of the Sale Shares reserved for Retail Investors shall be available for allocation to the investors in the Non-Retail category choosing to carry forward their bids to T+l Day and who have not been allotted Sale Shares on T Day. However, such investors are required to indicate their willingness to carry forward their bids to T+ 1 Day. Retail Investors will have an option to place a price bid or bid at “Cut off Price”. Cut-Off Price means the lowest price at which the Sale Shares are sold, as shall be determined based on all valid bids received in Non-Retail category on T Day. Upon determining Cut-Off Price for the Retail Category, the Sale Shares reserved for such category shall be allocated to eligible bids of Retail Investors on price priority method at multiple clearing prices in accordance with the SEBI OFS Circulars. In case of excess demand in the Retail Category at the clearing price/Cut-Off Price, allocation shall be done on a proportionate basis at such clearing price/Cut-Off Price (as the case may be). Bids by Retail Investors below the Cut-Off Price shall be rejected.
Settlement shall take place on a trade for trade basis. For bids received from Non-Retail Category on T Day, non-institutional investors and institutional investors who place orders with 100% of the order value deposited upfront, settlement shall take place on a T+I Day. In the case of institutional investors who place bids without depositing 100% of the order value upfront, settlement shall be as per the existing rules for secondary market transactions (i.e., on T+2 Day). For the bids received on T+l Day, from the Retail Category and from the un-allotted non-Retail Investors who choose to carry forward their bid to T+l Day, the settlement shall take place on T+3 Day. In case of non-institutional investors and institutional investors bidding with 100% margin upfront who chose to carry forward their un-allotted bids to T+1 Day, the settlement shall take place<on T+2 Day. The allocation to the non-Retail Investors shall be at price equal to the Cut-off Price or higher as per the bids.
About SBI Life
- Incorporated on 11th October, 2000, we are a joint venture between State Bank of India (SBI) and BNP Paribas Cardif S.A.
- SBI is the country’s largest commercial bank in terms of advances, deposits and number of branches. Its 22,414 strong branch network is spread across the country and covers some of India’s smallest and farthest towns and villages. BNP Paribas Cardif S.A is the insurance subsidiary of France-based BNP Paribas bank, and has operations across 35 jurisdictions globally.
- SBI Life is one of the leading private life insurance companies, offering a comprehensive range of savings and protection products through a strong distribution network.
- SBI Life went public in September 2017.
- In March SBI sold 8% and BNP Paribas Cardif sold 4% in the IPO, thus collectively selling 12%.
SBI Life Price Chart & Financial Overview
|Market Cap in Rs. Cr||68,000|
|Revenue TTM 12 m||44,604|
|CMP in Rs.||680|
|Price / Earning (PE)||51.25|
|Price / BV||0.68|
|Sales 3 yr CAGR||13.50%|
|Debt / Equity Ratio||0|
|52 week High/Low||713.80 / 485.00|
SBI Life : Salient points and Assessment
- PE investor Carlyle Group in March 2019 acquired 9% stake in SBI Life from BNP Paribas Cardif. This deal was at a sale price of Rs 515.01 a piece, the stake was sold at an 11.3 per cent discount to SBI market price of 580.50 prevailing at that time.
- SBI remains the majority shareholder with 62.1 per cent stake in the company. and is not diluting its stake.
- SBI Life has a unique a multi-channel distribution network comprising an expansive bancassurance channel, including State Bank.
- SBI Life reported Q4FY19 PAT at Rs 4.6 bn (up 20.1% YoY), primarily on account of higher income from investments (Rs 41.5 bn – up 476.1% YoY). AUM increased 21.3% YoY to Rs 1,410.2 bn
- Value of New Business (VNB) grew strong 23.7% YoY
- The life insurance sector in the country is having a good growth potential due to favorable demographics and current low penetration.
- I Intend to participate on Day 2 if there is reasonable difference between cut off price and market price which as on date is quite low.
Standard disclaimer: I am not a SEBI registered analyst. I may have vested interest in every stock I discuss. Please do your own due diligence as stock market investments have high degree of inherent risk.