• Investment World
• eWorld
• Brand Line
• Mentor
• Life
• Brand Quest
• The New Manager
• BL Club
• Smartbuy
• Books
• Gallery

Stocks

• Quotes
• SE Diary
• Scoreboard
• Open-End Mutual Fund

Foreign Exchange

• Rates
  
  

Shipping

• Ports
  
  

Archives

• Yesterday
• Datewise
• Resources
• In Focus
• In Depth
• Events 2007

Group Sites

• The Hindu
• The Hindu ePaper
• Business Line
• Business Line ePaper
• Sportstar
• Frontline
• The Hindu eBooks
• The Hindu Images

Insurance Australia Group has paid Rs 542.10 crore to pick up a 26 per cent stake in SBI General Insurance. Of this, while the equity capital is only Rs 39 crore, the balance Rs 503 crore is the share premium.

SBI General Insurance is a 74-26 joint venture in which SBI holds 74 per cent and IAG International Pty Ltd, a subsidiary of Insurance Australia Group holds 26 per cent.

While SBI has invested Rs 111 crore for its 74 per cent equity, its foreign partner brought in Rs 542.10 crore (including share premium), for its stake of 26 per cent, SBI said in a notice to the stock exchange.

Explaining the rationale of the hefty share premium paid by the foreign partner, a senior SBI official said, "We have a big franchisee.

The insurance venture can leverage the large network and distribution capabilities of the parent bank. Besides, SBI has a good brand equity and recall value."

SBI had signed the joint venture agreement with Insurance Australia Group in November last year for the general insurance business.

The venture has already received the R2 license from the insurance regulator, IRDA (Insurance Regulatory and Development Authority) and will soon apply for the R3 license.

Once the venture receives the R3 license, it will commence operations. "We are hopeful that we will begin operations in the first half of 2010", the official said.

The management team has also been put into place by the promoters.

The bank sees a lot of growth potential for its business.

"SBI has a large commercial clientele. The economy is growing at a healthy rate and this should translate into good business", he added.

More Stories on : General Insurance | Mergers & Acquisitions | State Bank of India

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Copyright © 2009, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line