Debt-ridden Future Group has announced its exit from the insurance business in a time-bound manner. Future Enterprises has decided to sell a 25% equity stake in Future Generali India Insurance Company Ltd (FGIICL) to its joint venture partner Generali Participations Netherlands for a cash consideration of Rs 1,252,95 crore. The equity selling is a part of its asset monetization plans to pare debts. FEL has received offers from several potential buyers for its remaining 24.91% stake.
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The sale is to meet FEL’s commitment under the One-Time Restructuring (OTR) plan implemented by the Reserve Bank of India (RBI). As part of that, the Future Group firm has to repay the loan of Rs 2,200 crore by March-end this year through asset monetization.
Currently, FEL holds a 49.91% stake in the general insurance company FGIICL and after the sale, it will come down to 23.91%. Generali will become the controlling shareholder of FGIICL with a 74% stake from its existing 49%.
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According to the FEL regulatory filing, Generali would also have the option to buy out FEL’s remaining interest in FGIICL— either directly or through a nominee. The valuation would be subject to regulatory approvals.
In the Life Insurance Joint Venture, FGILICL, Generali holds a 49% stake, while FEL holds a 33.29% stake, and the remaining 16.6% is owned by Industrial Investment Trust Limited (IITL).
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Generali has purchased a 16% stake owned by IITL, after receiving approval from the competition watchdog, the Competition Commission of India (CCI). It is also planning to invest up to Rs 300 crore in tranches in FGILICL to fund its growth plans. Generali will become the controlling stakeholder of FGILICL after the investment and its purchase of the 16% stake held by Industrial Investment Trust Limited in the JV firm. The regulatory filing said FEL is exploring options for the sale of its 33.3% stake in FGIICL.
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On January 27, 2022, Future Enterprises Limited’s stock rose 1.03% to close at Rs 9.80.