MUMBAI : Future Enterprises Ltd on Thursday announced the sale of 25% stake in Future Generali India Insurance Co. Ltd, its general insurance joint venture, to partner Generali Participations Netherlands N.V. In a stock exchange filing, Future said it will get a cash consideration of ₹1,252.96 crore from the sale, “plus an additional consideration that is linked to the date of the closing of the transaction".
Currently, Future holds 51% stake in the joint venture, while Generali owns 49%. Once the transaction is concluded, Generali will take control of the business with a 74% stake, the maximum a foreign entity can hold in an Indian insurer.
The sale will provide Future group much-needed capital as its operating entities such as Future Retail Ltd face the possibility of being tagged loan defaulters. Future Retail has moved the Supreme Court to prevent its lenders from declaring the company a non-performing asset for missing loan payments. On Thursday, the top court agreed to hear the petition.
Generali has also acquired an option to buy out Future’s remaining stake, directly or through a nominee, at an agreed valuation subject to applicable regulatory approvals, the Future statement said. Foreign direct investment (FDI) in insurance in India was 49% till March 2021, when it was raised to 74%.
“Increasing Generali’s stake in our Indian Life and P&C (property and casualty) insurance businesses represents a further step ahead in our growth journey in this high potential market. With an expected double-digit annual growth rate, India’s insurance market offers considerable opportunities, and we look forward to deepening our presence in this geography, becoming Lifetime Partners to an increasing share of Indian customers," said Jaime Anchústegui Melgarejo, chief executive officer, international, Generali Group. The transaction is subject to regulatory approvals and other customary conditions.
Future’s sale of its stake in the insurance venture also comes amid a heated battle between Future and Amazon over the sale of Future group’s retail assets to Reliance Retail. Last week, Amazon had approached Future with a proposal to invest ₹7,000 crore in Future Retail to bail out the embattled retailer. However, Future Retail has rejected the bailout proposal.
Generali also has an existing life insurance joint venture with Future in India, called Future Generali India Life Insurance Co. Ltd. The foreign partner has already received approval from the Competition Commission of India to purchase a 16% stake held by Industrial Investment Trust Ltd in this venture. It has also agreed to invest up to ₹330 crore in tranches in the life insurance business to fund its growth plans
