Lenders bet on Reliance Retail Ventures for Future Enterprises revival

Lenders say RRVL, if its offer is accepted, will get access to two insurance JVs which are currently owned by Future Enterprises with Generalli which gels with RIL's financial services business

Lenders have an optimistic outlook on Reliance Retail Ventures’ (RRVL’s) bid to acquire bankrupt Future Enterprises (FEL) as they look to recover part of their Rs 15,820 crore exposure to the company.

If its offer is accepted, RRVL (an RIL subsidiary) will get access to two insurance JVs, which are currently owned by Future Enterprises and Generalli, according to lenders. This gels with RIL’s financial services business, they said.

Apart from RRVL, Jindal India and GBTL, a fabric maker, have made offers for Future Enterprises. "RRVL, with its good financial backing and $111 billion valuation, is best placed to acquire FEL," said a banker.

Another banker said RRVL has the “financial bandwidth” and “experience” to acquire the company.

Future Enterprises was sent to bankruptcy court in August 2022 after it defaulted on its Rs 15,820 crore debt as claimed by lenders. Centbank Financial Services has made the biggest claim of Rs 3,345 crore, followed by Union Bank of India at Rs 2,097 crore. Bank of Baroda made a claim of Rs 1,908 crore, but of this only Rs 701 crore was admitted by the resolution professional.

In August 2021, Reliance Retail made an offer to lenders to acquire all the assets of Future group companies for Rs 24,700 crore. But they did not agree to this and sent several Future group companies for debt resolution under the insolvency and bankruptcy code, 2016.

Future Enterprises owns minority stakes in two insurance companies -- Future Generali India Life Insurance Company and Future Generali India Insurance Company.

If RRVL wins the race to acquire FEL, it will own minority stakes in both joint ventures.

Reliance has recently demerged its financial services business; it had a valuation of $20 billion. The company wants to enter all the verticals of financial services, including insurance.

RIL has been unlocking value across segments and has recently bought out minority shareholders in Reliance Retail (RR) with a share buyback. The company is in negotiations with Qatar Investment Authority to sell 1 per cent stake in RRVL at a $100 billion valuation.

In 2020, RRVL had sold stake sales of 10 per cent to various financial investors. RIL and its associate companies currently own 90 per cent stake in the company.

 

List of Claims from Financial Creditors - Future Enterprises Limited

Name	Amount Claimed	Amount of Claims Admitted
Centbank Financial Services Ltd	3,345	3,345
Union Bank of India	2,097	1,348
Bank of Baroda	1,908	701
Axis Trustee Services Limited	1,342	1,342
Bank of India	1,305	907
Central Bank of India	1,214	732
Punjab National Bank	1,102	977
Indian Bank Limited	611	609
UCO Bank	603	255
IDBI Bank	564	458
Total (All)	15,820	12,266

^{Source: Company}