The debt-laden Future Group, promoted by Kishore Biyani is planning to exit its general and life insurance businesses by selling its controlling stakes. These stakes are in the two joint ventures it has with Generali participation Netherlands NV. The funds so raised will be utilized for repayment of debts. A reliable source has confirmed these ongoing plans of the Future group. Future Group has held discussions with private equity fund True North, Hero Corporate Services, and Wipro promoted Premji Invest to sell-off its promoter holding in the two insurance subsidiaries. But Premji Invest did not make any comment regarding this matter.
Future Group shortlists buyers for the two insurance businesses, and have appointed UBS as the merchant banker. At the same time, Citi Group Global Markets has been hired by Generali to find out potential buyers for Generali’s stake in the two entire companies. Future Group which is Debt-strained has two insurance subsidiaries, Future Generali Insurance and Future Generali Life Insurance. The first one is for the general insurance business and the second one is for life insurance.
The future group has an alternative strategy in holding talks with SBI. The objective of the talk is to bring about a potential merger of insurance assets of the two Future Group insurance companies with SBI’s two insurance subsidiaries. As per this plan, the business of Future Generali Life could be merged with SBI Life Insurance, and the business of Future Generali India Insurance could be merged with SBI General Insurance. After the merger, Future Group will sell off its entire stake in the two merged entities to SBI or its entire stake could be sold to some other domestic player to raise the money needed for repaying a part of its Rs.12000 crore worth of debts. As these stake sales are not put forth directly to potential buyers, this plan could be delayed. The discussions are only at an initial stage. The family officers and private equity funds are being asked to get the entire Indian promoters’ stake in both the insurance businesses. The group debt is so large that it takes time for clear cut settlements. Both Indian promoters, Future Retail Limited and Shendra Advisory Services together own more than 74% stake in Future Generali India. During fiscal 2020, Future Generali Life earned the first-year premium of Rs.767.43 crore, which is higher than FY19.
Biyani has been looking to sell the shares in Future Group Companies to refund debts but a drastic fall in share prices has created dilemmas for Future Group. In fiscal 2020, Future Group raised a sum of Rs. 4,600 crore and selling stake in Future Lifestyle Fashion Blackstone for Rs. 1750 crore. The reputed US online retail giant Amazon invested Rs. 1430 crore in Future Coupons Ltd., the promoter entity of Future Retail.
