The initial public offering (IPO) of SBI Life Insurance is a grand success with the issue getting about 3.58 times oversubscribed on the last day of bidding on September 22. The company will announce the share allotment details on September 27. SBI Life Insurance IPO is expected to raise about Rs.8,400 crore from institutional and non institutional investors.
Under this IPO, SBI Life Insurance’s stock was priced in the range of Rs.685 to Rs.700 per share. Based on this initial share sale, the company was valued at around Rs.70,000 crore. For this offering, SBI Life’s primary stockholders, State Bank of India and BNP Paribas Cardif, have offered about 8% and 4% of their shares respectively.
The portion set aside for institutional investors has been subscribed 12.56 times, while that set aside for retail investors has been subscribed 0.84 times. Once the SBI Life Insurance IPO is concluded, SBI and BNP Paribas will have 62.1% and 22% shares, respectively, left in the company.
This marks the second IPO offer by a life insurance company in India. Last year, ICICI Prudential Life Insurance Company went public and raised about Rs.6,000 crore from various investors. A few days ago, ICICI’s general insurance wing ICICI Lombard issued the first IPO in the general insurance domain and raised about Rs.5,700 crore from the market.
The entry of insurance companies into the stock market is expected to change the mutual fund landscape in the coming years. Experts predict that nearly 5% to 7% of mutual fund allocation will now focus on insurance company shares. The oversubscription indicates that there is a huge demand for insurance companies in the market. Other insurance firms including HDFC Standard, New India Assurance, and GIC of India are also expected to issue IPOs soon.