In the coming 12 to 18 months, State Bank of India (SBI) may witness significant capital market activities. Dinesh Khara, the Chairman of SBI, hinted at the possibility of listing SBI Payments Limited and SBI General Insurance Company Limited.
Listing Plans:
Although specific timelines were not disclosed, industry sources reveal ongoing discussions about initiating public offerings for these two businesses.
Reasoning for Listing:
Khara explained the rationale behind focusing on payments and general insurance businesses for listing instead of the earlier plan involving the asset management company. He emphasized that listing subsidiaries depends on the capital structure. He highlighted that while companies like asset management rely more on knowledge capital, capital-intensive businesses like general insurance are more suitable for listing. SBI Payments and SBI General Insurance fit this criterion.
Valuation:
SBI Payments is estimated at around ₹45,000 crore, while SBI General Insurance is valued at ₹30,000 crore.
Potential Benefits:
Industry insiders suggest that if SBI lists its payments business within the next 18 to 24 months, it could lead to substantial value creation for the bank. SBI Payments is recognized as a major player in the merchant space and is profitable, which could potentially unlock significant value for SBI.
SBI Payments Limited:
SBI Payments, a relatively new subsidiary established in 2019 through a joint venture with Hitachi Payments Services Private Limited, focuses on merchant acquiring business. With SBI holding a 74% stake, it boasted 2.93 million merchant payment acceptance touchpoints and over 1.14 million point of sale machines as of March 31, 2023.
SBI General Insurance Company Limited:
Contrastingly, SBI General Insurance is an older business within the SBI group. While its listing was initially planned in 2019, market conditions led to its postponement within two years. SBI holds 69.95% in the general insurance business, generating a net profit of ₹184 crore and a gross written premium of ₹10,888 crore in FY23.
Conclusion:
The potential listing of SBI Payments and SBI General Insurance signifies strategic moves by SBI to capitalize on its diverse business portfolio and unlock significant value in the capital market.
