IAG to hike stake in SBI General to 49% under new norms

Insurance Australia Group (IAG) will increase its stake to the maximum allowed 49 per cent in its general insurance joint venture with State Bank of India (SBI), India's largest bank said today, after the government increased the foreign investment ceiling in the insurance sector earlier this month.

"IAG currently owns 26 per cent of SBI General Insurance, with SBI, holding 74 per cent. After the deal, SBI's stake in the venture will fall to 51 per cent," it said.

SBI said in a regulatory filing that the executive committee of its central board had decided to begin the process, including the appointment of a valuer to decide on the price of shares in the unlisted general insurer.

The lender has separately been in talks with BNP Paribas to sell its stake in their Indian life insurance joint venture. BNP currently has 26 per cent of the venture, with SBI owning the remainder.

SBI may look at an initial public offering (IPO) of its life insurance unit, but this could take more than a year, the bank's chairman told Reuters this week.