Future Retail seals minority stake sale in life insurance venture to IITL

Kishore Biyani-led Future Group has sold 22.5 per cent stake in Future Generali India Life Insurance Company Ltd to Industrial Investment Trust Ltd (IITL) for an undisclosed amount, as per a statement issued on Tuesday.

Sources familiar with the development told VCCircle that the deal value is pegged at Rs 350 crore ($56.5 million). This values the life insurance business at over $250 million (Rs 1,550 crore).

In March this year, Future Retail (then known as Pantaloon Retail (India) Ltd) had entered into a share purchase agreement (SPA) with IITL to sell 22.5 per cent stake in Future Generali India Life Insurance for an undisclosed amount. At that time the deal value was not disclosed but was believed to be around Rs 300 crore. This has increased in the final close of the transaction.

Systematix Capital Services acted as the exclusive advisors to Future Group and IITL on this transaction.

Future Group has been exiting non-core business to lower debt and fund its growth plans as a strategy.

The group has two insurance ventures, one for life insurance and another for general insurance with Italy’s Generali and holds 74 per cent stake in each.

Future Group separately struck a deal to sell stake in general insurance business. It announced that it is divesting majority stake in its general insurance venture Future Generali India Insurance Ltd (FGI) through a merger with L&T General Insurance (LTGI) besides part stake sale to its other partners.

FGI is a joint venture between Future Group and Italy’s Generali. Future Group’s flagship retail firm Future Retail (formerly Pantaloon Retail) holds around 50 per cent stake while the rest is with a promoter group entity called Sprint Advisory Services Pvt Ltd.

As per the deal, FGI will merge with LTGI in a deal where Future Group will also sell part of its stake to both L&T and Generali. While Generali will maintain its 26 per cent holding in the merged entity, L&T will hold 51 per cent, post-merger. The Future Group will continue to own 23 per cent.

In the non-life insurance segment, Future Generali is the 11th largest private insurer 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.

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 occupied the 19th spot when the deal was announced early this year.

IITL is a public-listed investment firm registered as a non-banking financial company. The transaction has received necessary approvals from governmental and regulatory authorities.

(Edited by Joby Puthuparampil Johnson)

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