Pantaloon Retail (India) Ltd has entered into a share purchase agreement (SPA) with Industrial Investment Trust Ltd (IITL) to sell 22.5 per cent stake in Future Generali India Life Insurance Company Ltd for an undisclosed amount, according to a company disclosure on Friday.
The group has two ventures (one for life insurance and another for general insurance) with Italy’s Generali and holds 74 per cent stake in each. Although FDI is not allowed beyond 26 per cent at present, this will be raised to 49 per cent soon.
Post this transaction, Kishore Biyani-led Future Group, consisting of Pantaloon Retail and Sprint Advisory Services Pvt Ltd, will hold 52 per cent stake in the life insurance JV with Italy’s Assicuranzioni Generali S.P.A or Generali.
IITL is a public-listed investment firm registered as a non-banking financial company. The transaction is subject to necessary approvals from governmental and regulatory authorities including the CCI, the IRDA and the RBI.
The group, which is known for its presence in the retail business, has been offloading stake in various ventures to help finance debt overhang. Last year, it sold its public-listed financial services firm Future Capital to Warburg Pincus.
The stake sale announcement by the group’s flagship firm Pantaloon Retail comes after The Economic Times first reported that Future Group is set to raise around Rs 800 crore by unlocking value in two insurance joint ventures with Generali.
It pegged the size of the first leg of the deal with IITL at around Rs 280-300 crore and said IITL would also have the option of picking an additional 1.5 per cent stake within the next 12 months.
The news of stake sale in Future Generali has been doing the rounds for quite some time now. As per the ET report, Future Biyani is separately in talks with L&T to part-exit its non-life insurance arm.
In the non-life insurance segment, Future Generali is the 11th largest private insurer out of a total 20 private non-life insurers. However, this happens to be a segment where public sector insurers account for more than half of the total premium collected in a year. It is a bit player in the market with gross premium of Rs 832 crore with just 1.67 per cent market share, as per data collated by the insurance regulator IRDA for the month of December, the latest month for which data is available.
In the life insurance space, Future Generali is much smaller, though. Among the 23 private life insurers who account for just 10 per cent of the total premium collected in a market dominated by the PSU goliath LIC, Future Generali occupies the 19th spot with total first year premium collected during April 2012-January 2013 (the eight-month period in the current fiscal) pegged at just Rs 147 crore, according to IRDA.
Systematix Capital Services acted as the exclusive advisors to Future Group and Industrial Investment Trust Ltd (IITL) on this transaction.
(Edited by Sanghamitra Mandal)