InvestorQ : Can I apply for the SBI Life OFS and what are the prospects?
manisha Kolvenkar made post

Can I apply for the SBI Life OFS and what are the prospects?

Answer
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Mahima Roy answered.
1 year ago


The SBI Life OFS (Offer for Sale) is open for a period of 2 days on June 25th   and 26th when you can subscribe under the normal IPO application route. The foreign partner of SBI, BNP Paribas Cardiff, will be offering 2.5 crore shares in the OFS representing 2.5% stake. BNP Paribas currently holds 7.7 crore shares of SBI Life representing 5.5% of the capital which will stand reduced to 5.5% post the OFS. While SBI continues to hold 62.10% stake in SBI Life, Carlyle had recently bought 9% in SBI Life.

It is an OFS worth applying for 3 basic reasons. The OFS is being offered at Rs.650 as against the current market price of Rs.710. Even assuming that the stock could correct after the OFS, you are still getting SBI Life at a very good price. Secondly, Indian private life insurers have been gradually increasing their market share from LIC and now account for nearly 35% of the total market for life insurance. Also, SBI Life is among the top private insurers with its strong banking network and franchise. Thirdly, Indian life insurance market is highly underpenetrated and this opens up a huge world of opportunity for SBI Life. At Rs.650, the downside risk appears to be limited and you could stand to benefit in the medium to long term.