Carlyle Acquires 9% Stake In SBI Life For Rs 4,600 Crore

Carlyle Group said it acquired 9 percent stake in SBI Life Insurance Company Ltd. from BNP Paribas for Rs 4,600 crore.

BNP Paribas Cardif, a subsidiary of the France-based BNP Paribas group, sold 9.2 crore shares or 9.23 percent stake in SBI Life on the Bombay Stock Exchange, and 9 crore of those were acquired by CA Emerald Investments, an affiliate of the Carlyle Group, according to a statement. The deal valued SBI Life at a discount of 10 percent to its Thursday closing price of Rs 580.50, according to Bloomberg data.

Following the transaction, BNP Paribas Cardif will own 12.8 percent stake in SBI Life, while SBI will remain the majority shareholder with 62.1 percent stake, Carlyle said in a separate statement.

“The life insurance industry in India has strong growth potential thanks to favourable demographics and an increasing focus on financial savings. SBI is the most trusted brand in financial services,” Sunil Kaul, managing director of the Carlyle affiliate’s advisory team, said.

BNP Paribas said it expects to generate a capital gain after tax of 450 million euros (or about $510 million) from the transaction in the next quarter.

‘Great Deal At Fantastic Price’

Madhukar Ladha, analyst at HDFC Securities, said the Carlyle Group has got a “great deal at a fantastic price”. “The overhang of the stock is now behind us and appreciation is currently being seen in the stock prices.”

The Carlyle Group has been investing in the financial services sector in Asia Pacific for 20 years. Its recent investments in financial services include Punjab National Bank Housing Finance Ltd. and SBI Card.

Shares of SBI Life Insurance dropped nearly 12 percent to Rs 510 in early trade before recovering to rally as much as 7.3 percent to Rs 622 apiece.