Future Group has announced that it will sell its 25 percent stake in Future Generali India Insurance Company Ltd. (FGIICL) to its JV partner Generali for a monetary value of Rs 1,252.96 crore as part of its asset monetization approach to minimize debts.
Furthermore, Generali has received an option to acquire Future Enterprises Ltd.’s (FEL) remaining shareholding in FGIICL, which operates in the general insurance industry, according to a late-night regulatory filing by the Future Group firm. Future Enterprises announced the deal in a late-night filing to the stock exchanges on January 26. It is subject to regulatory approvals among other customary conditions between the two entities.
The regulatory filing by the Future Group firm said, “FEL has agreed to sell a 25 percent stake in its General Insurance Joint Venture, FGIICL, to its Joint Venture partner Generali for a cash consideration of Rs 1,252.96 crore, plus an additional consideration that is linked to the date of the closing of the transaction.” Generali has also received an option to buy out FEL’s remaining shareholding in FGIICL, “directly or through a nominee,” at an agreed valuation, subject to required regulatory approvals, according to FEL.
Future Enterprises and Generali Participations Netherlands NV (Generali) have formed FGIICL, which is a joint venture. Future Enterprises currently owns 49.91 percent of Future Generali India Insurance. Its shareholding will be decreased to 24.91 percent following the transfer of its stake to Generali. As a result, the Italian company’s shareholding will increase to the maximum permissible threshold of 74 percent.
Future Enterprises has received proposals from potential buyers for its remaining 24.91 percent stake in Future Generali India Insurance, according to the official release. It is also looking at options for selling its 33.3 percent stake in the life insurance JV and considers to complete its exit from both ventures in a timely manner to fulfill its commitment under the one-time restructuring policy implemented under the RBI’s August 6, 2020 circular for cases falling under Covid-19 related stress.
Generali had previously gotten approval from the Competition Commission of India (CCI) to acquire a 16 percent position in the life insurance joint venture, Future Generali India Life Insurance, controlled by Industrial Investment Trust Ltd. It has also agreed to inject up to Rs 330 crores in the company in tranches to fund its expansion goals. Generali would become the largest shareholder in Future Generali India Life Insurance as a result of the equity purchase and capital infusion.
Kishore Biyani’s Future Group announced a Rs 24,713 crore deal in August 2020 to transfer its retail and wholesale divisions, as well as logistics & warehousing, to Reliance Retail Ventures Ltd (RRVL), a subsidiary of Reliance Industries Ltd. Future Enterprises Ltd. is the transferee entity to RRVL as part of the deal. Future Group’s 19 retail, logistics, wholesale, and warehousing businesses would be combined into a single company, FEL, and then transferred to Reliance. However, American e-commerce giant Amazon is opposing the merger through its 49 percent interest in Future Coupons Private Ltd. (FCPL), a shareholder in Future Retail Limited.