SBI Life shares tank 4%. Here's why

New Delhi: Shares of SBI Life Insurance Company tanked as much as 4 per cent during early trade on Thursday following the reported stake sale by Canada Pension Plan Investment Board (CPPIB).

CPPIB was supposed to offload 2 per cent stake in SBI Life Insurance Company worth Rs 2,274 crore through block deals, according to a term sheet issued by the sole book-runner of the deal BNP Paribas.

SBI Life's shares shed 4 per cent to Rs 1,168.30 on Thursday, before trading at Rs 1,175.55 at 10.25 am. BSE Sensex was trading 28.14 points, or 0.05 per cent, lower at 58,222.12. The scrip settled at Rs 1,219.90 on Wednesday.


The floor price for the stake sale of more than 20 million shares was set in the range of Rs 1,159.05-1,220.05. The fund will likely make as much as 111 per cent return from its investment in SBI Life in two-and-a-half years.

Trade volume on the exchanges suggest that the deal has taken place. Over 2.38 crore shares exchanged hands on BSE, whereas more than 0.52 crore were traded on National Stock Exchange (NSE) at the time of writing this report.

As of June 30, Canada Pension Fund held a 2.86 per cent stake in the company. CPPIB is likely to increase the deal size by 3 million shares in case of oversubscription, according to the term sheet.

CPPIB picked up 2.24 million shares of SBI Life at Rs 700 apiece in September 2017 through an anchor allotment ahead of its initial public offering.

Last month, the US private equity fund CA Emerald Investments, an affiliate of Carlyle Asia Partners, sold its entire 1.9 per cent stake in SBI Life Insurance Company worth Rs 2,147 crore at Rs 1,130 per share.