After selling a majority stake in his financial services arm, Future Capital, to PE giant Warburg Pincus, Kishore Biyani is getting ready to unlock the value in his general insurance joint venture Future Generali India Insurance Company by selling Pantaloon Retail’s stake to L&T. Founded in 2007, Future Generali is a JV between Future Group and the Generali Group of Italy. The Future Group owns 74 per cent in the company, while the Italian insurer owns 26 per cent. Of the 74 per cent, Biyani’s flagship Pantaloon Retail, directly and via special purpose vehicles (SPVs), holds 50 per cent, while 24 per cent is held by the Biyani family. Both companies have a similar JV in life insurance, named Future Generali Life. L&T General Insurance Company is a wholly-owned subsidiary of Larsen & Toubro (L&T), founded two years ago.
Though the deal is said to be in the final stages, it’s yet to be confirmed by both the companies involved. However, according to sources, Pantaloon Retail’s stake is being sold to L&T General Insurance for a significant premium of Rs 600 crores. As on June 2012, Pantaloon Retail is estimated to have Rs 5,000 crores in debt, but through a series of strategic deals across businesses including a majority stake sale to Aditya Birla Group, Future Group has brought it down by half in the past six months.
Future Group’s general insurance arm had grown its premium income 53 per cent to Rs 938 crores in 2011-12 from Rs 612 crores collected in the previous financial year. The total share capital of Future Generali India was Rs 512 crores as on December 31, 2011. Future Generali declared a net loss of Rs 42.5 crores in April-December last year and is expected to turn profitable this fiscal.
Source: Fashion United