State Bank of India said its central board approved dilution of its stake in its life insurance arm through an initial public offer for which it has already secured the sectoral regulatory approval.

Once it hits the markets, SBI Life Insurance would become the second insurer after ICICI Prudential Life to go public. "The executive committee of the central board of the bank at a meeting held accorded the final approval for divestment of SBI's stake in SBI Life through an IPO," SBI said in an exchange filing.

Last Friday, the insurance regulator Irdai approved SBI Life's Rs 7,000 crore IPO application, making it the largest share sale by a life insurer in the country. But the company is awaiting the final approval from the markets watchdog Sebi. Pending all the approvals from all regulators, the board has decided to go ahead with the share sale of up to 8 crore equity shares, the price of which will be fixed later in consultation with selling shareholders-the parent SBI, and the foreign partner BNP Paribas Cardiff, the filing said.

SBI Life has hired BNP Paribas, Citi, Kotak Investment Bank and Axis Capital to manage the initial share sale. SBI Life is a joint venture between State Bank and BNP Paribas Cardiff in which SBI holds 70.1 per cent and BNP Paribas Cardiff 26 per cent. Private equity firm KKR and Singapore-government owned investment company Temasek holds 1.95 per cent each in the life insurer. The company is expected to file draft share sale documents with the Sebi in the next few weeks. SBI Life is the second largest private life insurer after ICICI Prudential.

In December, KKR and Temasek bought 1.95 per cent each at Rs 460 per share, which valued the insurer at Rs 46,000 crore. Last year, ICICI Prudential mopped up Rs 6,057 crore through an IPO and became the first life insurer to go public, valuing the company at Rs 48,000 crore. SBI Life's net profit grew 10.9 per cent to Rs 954.65 crore in the year to March 2017 from Rs 861.03 crore in the previous year.

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