SBI Life may go public

SBI Life Insurance is mulling over an initial public offer in the year 2008-09. With the proposal of a holding company, submitted to the Reserve Bank of India, still uncertain, the life insurer is seriously weighing a float and has approached the Insurance Regulatory and Development Authority (Irda) for clarifications of the Insurance Act, over changes in the promoters’ stake. SBI Life also plans to raise Rs400 crore equity, while expecting robust growth during the last couple of months of the fiscal.

The insurer has set in process an elaborate internal exercise to assess various valuation benchmarks like “actuarial parameters” and “ratios of credit worthiness” for the company.

Sharing the company’s plans, Uday Shankar Roy, managing director and CEO, told DNA Money, “We have to think in terms of an IPO, now that there is an uncertainty on the status of a proposed holding company. We are now qualified to float an IPO as we have made consecutive profits.”

The RBI is buying time on a decision to allow a holding structure for banks. As the Banking Act does not provide for specific guidelines for holding companies, this will enable financial biggies like ICICI, SBI and others to spin off their insurance and mutual fund ventures into a separate entity.

“We have also asked the IRDA for certain interpretations on the Insurance Act with regard to delisting in 10 years and once all that is in place, respective promoters will take decisions. All these are basically run-ups to a formal listing sometimes next year”, Roy said.

The company is aiming to close the fiscal with a premium income of around Rs6,000 crore. According to the CEO, about 44% of its business comes from bancassurance and the ideal figure would be a share of 50%, for which the company is working on SBI linkages. Having launched the child’s plans and a unit-linked HNI product recently, the company is also planning to come up with a health insurance scheme over the next few months.