Future group eyes insurance biz sale to SBI General, Premji Invest

The Kishore Biyani-led Future group has zeroed in on SBI General to sell its majority stake in the general insurance joint venture, and on Premji Invest for its life insurance venture stake, bankers in the know said. 

“The lenders are asking the promoters to expedite the sale of insurance JVs and use the proceeds to repay loans, considering that they have defaulted,” said a banker. Emails sent to the Future group and Premji Invest did not elicit any response. 

The Future group holds 51 per cent in the general insurance business, while the rest is owned by Italy’s Generali group. In the life insurance venture, the group’s stake is capped at 34 per cent. Stakes in both insurance companies are pledged with the lenders.

In FY20, Future Generali India Life Insurance saw its new business premium rise 7.35 per cent to Rs 767.43 crore from Rs 714.90 crore in the previous year. So far in FY21, its new business premium has dropped 63.13 per cent due to the Covid-19 impact. Future Generali Life had a 0.3 per cent market share in terms of new business premium in FY20.

Future Generali General Insurance, on the other hand, reported a growth rate of 33 per cent in gross premium at Rs 3,417 crore in FY20 compared to Rs 2,553 crore in the previous year. It had a market share of 1.81 per cent as of FY20 in premiums earned. The promoters, who hold 42 per cent in the listed Future Retail (FRL), of which 90 per cent is pledged with banks, are also in the final stages of talks to sell the company to Reliance Retail.  FRL has sought increased working capital limits and Covid-19 emergency lines. The company has a short-term obligation of around Rs 2,200 crore as of June-end, which has been refinanced by the lenders.

A source said the offer by RIL to take over Future Retail was on the table and it was now up to Biyani to accept it. “RIL’s offer is not very attractive for the promoters, but it will be able to save Future Retail as an entity. Now Biyani will have to take a call, as by September-end, the moratorium announced by the RBI on corporate debt will go,” said another source.

The Future group fell into financial distress after the promoter group debt rose from Rs 11,790 crore in March 2018 to Rs 11,970 crore in March 2019 despite monetisation efforts.  

With inputs from Subrata Panda