India’s largest lender State Bank of India (SBI) is planning to sell stakes in some of its well-performing subsidiaries including SBI General, SBI Card, and SBI Capital Market (SBI Caps). According to SBI’s Chairman Rajnish Kumar, the stake sale is a part of the company’s capital-raising exercise that would happen over the next two years.
Last year, SBI raised money by issuing an initial public offer of its life insurance wing SBI Life Insurance. SBI is reportedly planning to raise Rs.20,000 crore through the stake sale of its various ventures. The capital raised in this process will be used to fund growth.
Rajnish Kumar stated that the bank’s subsidiaries are doing exceedingly well in the market. These firms hold immense value and their potential is yet to be unlocked. By selling the stakes in these firms, SBI plans to unlock that potential in the current as well as next year. He also noted that SBI will be shedding about 24% to 49% stake in some of these subsidiaries.
SBI is all set to bring in an investment partner for its investment banking subsidiary SBI Caps this year. SBI is willing to shed up to 49% stake in this firm. SBI is also in the process of merging its project advisory business in SBI Caps with that of the main bank. According to Kumar, the decision to merge the two is a result of duplication in the project finance business.
SBI Caps provides investment banking and corporate advisory services, and it is the largest domestic investment bank in the country. The company reported a profit of Rs.327 crore in the fiscal year 2018 compared to Rs.252 crore in the previous year.
SBI’s managing director Dinesh Khara stated that the bank would sell about 3% to 5% of its general insurance business this year. He also said that SBI’s credit card business would be listed for offering in the fiscal year 2020.