The State Bank of India’s general insurance arm expects to hit the capital market with its initial public offer towards the end of 2019-20.
A joint venture between State Bank of India and Insurance Australia Group (IAG), the general insurance arm has seen a 4 per cent dilution of stake worth Rs 481.73 crore in favour of two private equity funds — Axis Opportunities AIF-1 and PI Opportunities Fund 1.
The price discovery exercise announced at the end of September values the insurance company at around Rs 12,000 crore.
“How much to dilute is a decision to be taken by both the shareholders. The IPO may take place towards the end of 2019-20. The recent dilution is to get an idea about the valuation,” said Pushan Mahapatra, managing director and CEO of SBI general Insurance. The SBI has already listed its life insurance arm on the bourses.
Mahapatra added that the insurance company was well capitalised with a solvency ratio at 2.46 against a requirement of 1.5 and return on equity at 27.10 per cent in the first half of 2017-18 against 19.70 per cent in the corresponding year-ago period.
The general insurance company has seen a 30 per cent growth in gross written premium in the first six months of 2018-19. Against a gross written premium of Rs 1,593 crore in the first half of 2017-18, the same at the end of September quarter in the ongoing fiscal is Rs 2,067 crore.
“Against an industry growth of around 12 per cent, our growth rate has been 30 per cent. The business has grown across verticals such as fire, health, engineering, personal accident and motor has also done well. We expect to sustain the growth momentum in the second half of the financial year,” said Mahapatra.
The general insurance company recorded a net profit of Rs 217 crore in the six-month period against Rs 132 crore in the year-ago period.
NPA sale
The SBI, the country’s largest lender, has put up for sale three of its non-performing loan accounts to recover dues of Rs 2,110.71 crore.
An e-auction will take place on December 13 for the sale of these three accounts — Sona Alloys Pvt Ltd, MCL Global Steel Pvt Ltd and Jayaswal Neco Industries.
“In terms of the bank’s policy on sale of financial assets in line with the regulatory guidelines, we place these accounts for sale to banks/ARCs /NBFCs/ FIs on the terms and conditions indicated there against,” the SBI said in the auction notice on its website.