Sale in insurance business to help Future repay debt

The group owes over Rs 12,000 crore to its lenders, which it hoped to meet via the sale of its retail assets to Reliance Industries for a consideration of Rs 24,713 crore.
Future Group. (Photo | www.futuregroup.in)
Future Group. (Photo | www.futuregroup.in)

MUMBAI: The debt-ridden Future Group’s stake sale in its general insurance business to joint venture partner Generali will help it meet the first tranche of payment to lenders under the one-time restructuring (OTR) offered by them to Covid-affected businesses.

The group, which opted for the OTR last year, will receive Rs 1,252.96 crore from Future Enterprises’ (FEL) 25% stake sale to Generali in Future Generali India Insurance Company Limited (FGIICL). It will also receive an additional consideration linked to the date of the closing of the transaction.

“...it (the Generali deal) will help us pay the first tranche of debt as per the OTR scheme of the banks,” a person from Future Group told ENS. “The deadline of the payment is March end.” Under the restructuring pact, it will have to pay around Rs 2,200 cr to lenders by March end, said the person.

The group owes over Rs 12,000 crore to its lenders, which it hoped to meet via the sale of its retail assets to Reliance Industries for a consideration of Rs 24,713 crore. However, the sale was stopped after Amazon, which holds stake indirectly in Future Retail, sought arbitration against the deal on grounds of violation of contractual non-compete agreements.

Future Enterprises (FEL) on Thursday said it had agreed to sell a 25% stake in its general insurance joint venture to joint venture partner Generali Participations Netherlands (Generali), for a cash consideration of `1,252.96 crore, plus an additional consideration that is linked to the date of the closing of the transaction.
Generali has also acquired an option to buy out the company’s remaining interest in FGIICL, directly or through a nominee, at an agreed valuation subject to applicable regulatory approvals.

After the transaction, Generali will hold 74% in the insurance JV. “The transaction is subject to applicable regulatory approvals and other customary conditions,” Future Enterprises said in a statement. Generali had earlier received approval from the Competition Commission of India to purchase 16% stake held by Industrial Investment Trust Limited in the Life Insurance Joint Venture, Future Generali India Life Insurance Company Limited (FGILICL).

It has also agreed to invest up to `330 crore in tranches in FGILICL to fund its growth plans. Pursuant to these transactions, Generali will acquire a majority stake and control in both insurance joint ventures.

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