MUMBAI: In a deal which values SBI Life at Rs 46,000 crore, State Bank of India has sold a 3.9% stake in its insurance arm to KKR and Singapore's Temasek group for Rs 1,794 crore. The valuation is higher than the Rs 42,300-crore market capitalization of the largest private life insurer, ICICI Prudential.The bank's board approved the deal at its executive committee meeting on Friday .SBI's private placement of equity in the life insurance arm is seen as a price-discovery process which is a precursor to the listing of the company . SBI chairman Arundhati Bhattacharya said the bank still has plans to list the company . The bank may also look at diluting stake in its non-life arm SBI General Insurance.The placement will be done through an investment vehicle affiliated to KKR-managed funds and a Temasek arm. Both investors will pur chase 1.95 crore shares each from SBI at Rs 460 apiece.On completion of the transaction, SBI will hold a 70.1% stake in SBI Life while its joint venture partner BNP Paribas Cardif will continue to hold 26.0%. Kotak Mahindra Capital Company and SBI Capital Markets acted as exclusive financial advisers for the transaction.Temasek had picked up a 2% stake in ICICI Prudential Life Insurance in its pre-IPO preferential allotment as well, while PremjiInvest had acqui red 4%. The ICICI Pru private placement had valued the company at Rs 32,500 crore in 2015. A year earlier, the Premji family trust had picked up close to 1% in HDFC Life, valuing it at close to Rs 20,000 crore.According to Bhattacharya, the valuation is an indicator of the significant value created by the company since its inception in 2001. According to industry officials, the life insurance arm has got top valuation because of the distribution strength of the bank. SBI has a network of 16,000 branches, which will increase to 22,000 following the merger of associate banks, which is expected to be completed by March 2017. In addition, the bank has a network of regional rural banks and business correspondents. "The partnership with KKR and Temasek is a recognition of the efforts of SBI Life's commitment to create a high-quality institution which is a leader in the Indian private life insurance space," said Bhattacharya.