State Bank of India (SBI) is the largest lender of the country and has decided to cut off 2.1% of its stake through an offer for sale in the subsidiary SBI Life Insurance. The sale offer is open from June 12 with a floor price of Rs 725 apiece, which is at 2.1% discount from the last close.
It is expected that SBI will garner $202 million via the share sale.
In a statement to the exchanges, SBI said that the board has given a heads-up to divest 2.1% stake in SBI Life. This move is to achieve minimum public shareholding of 25% (remaining part of the bank’s share for minimum public shareholding), through offer for sale.
SBI Life is a joint venture between SBI and BNP Paribas Cardiff.
At the end of March, 2020, SBI held a 57.60% stake in the life insurer and BNP Paribas Cardiff 5.20%, thereby taking the promoter stake to 62.80 per cent.
Till March 2020, the public shareholding in SBI Life is 37.20%.
According to Securities and Exchange Board of India (Sebi) listing norms, promoters have three years from the date of listing to bring down holding to 75%. If the stake goes past 75% because of acquisitions such as open offer or delisting, promoters get one more year to bring down the stakes.
According to Sebi norms, SBI Life’s promoter shareholding is well below the minimum threshold.
Last year in June, BNP Paribas Cardiff cut off its shareholding in the life insurer and sold 2.5% of its stake. It had sold more than 16.5% stake in the insurer in 2019 for more than Rs 9,200 crore.
