Future Enterprises agrees to sell 25% stake in insurance JV to Generali

Generali has also acquired an option to buy out the company's remaining interest in FGIICL, directly or through a nominee, at an agreed valuation subject to applicable regulatory approvals.

Future Enterprises has agreed to sell a 25 per cent stake in its general insurance joint venture to its Dutch partner for Rs 1,252.96 crore, or Euro145 million, in cash, and an additional consideration linked to the date of the closing of the transaction.

Once the transaction is done, Generali Participations Netherlands N. V. (Generali) will hold around 74 per cent in Future Generali India Insurance Company Ltd (FGIICL), the joint venture.

Generali has also acquired an option to buy the company’s remaining interest in the venture, directly or through a nominee. The transaction is subject to regulatory approvals and other conditions.

Further, Generali has received approval from the Competition Commission of India to increase its stake in the life insurance joint venture it has with Future Enterprises, Future Generali India Life Insurance Company Ltd (FGILICL), by purchasing the 16 per cent held by the Industrial Investment Trust in the company, for euro26 million.

In addition, Generali will subscribe to a preferential allotment of shares in FGILICL (around euro21 million). Following these transactions, Generali’s stake in the life insurance company will go up to 68 per cent, which may increase to 71 per cent by the end of 2022, following the preferential allotment of shares.

Future Enterprises has to pay its lenders approximately Rs 2,000 crore, which is due by March, and the amount from this stake sale will be used to reduce its debt.

Metta Capital Advisors acted as financial advisors and Trilegal was legal advisor to Future Enterprises for this transaction.

 these transactions by the Generali group, it will become the majority shareholder in both the insurance joint ventures it has with Future Enterprises -- the first international insurer to take up a majority stake in both its Indian insurance joint venture companies since the new foreign ownership cap took effect.

In last year’s Union Budget, the government allowed 74 per cent foreign direct investment in the insurance sector from 49 per cent earlier, and allowed foreign ownership and control with safeguards.

“The transactions are fully in line with the ‘Lifetime Partner 24: Driving Growth’ strategy, strengthening Generali’s position in fast-growing markets and confirms the Group’s commitment to deliver profitable growth whilst creating value for customers, consistent with Generali’s Lifetime Partner ambition,” Generali said in a statement on Thursday.

Commenting on the development, Jaime Anchústegui Melgarejo, chief executive officer International, Generali Group, said: “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.”

In FGIICL, Future Enterprises and Generali hold 25.5 per cent each while Shendra Advisory Services, an SPV in which Future Enterprises holds 49.82 per cent, has 48.98 per cent.

Similarly, in FGILICL, Future holds 8.88 per cent directly and a further stake through the SPV Sprint Advisory Services. Generali has the rest.

Future Enterprises holds 49.81 per cent in Sprint Advisory.

Meanwhile, Future Enterprises has received offers from potential buyers for its remaining 24.91 per cent in FGIICL, it said in its filing. It is exploring options for selling its 33.3 per cent interest in the life insurance JV and expects to complete the exit of its holding in the insurance joint ventures in a time-bound manner.