Generali eyes bigger stake in India businesses as Future seeks exit -sources

Future Retail

08/12/2021 13:56

* Generali eyeing 74% stake in India joint ventures -sources
    * Generali currently owns 49% in India insurance businesses
    * India's Future Group targeting $400 mln from stake sales
-source
    * Future eyes funds for retail, to clear liabilities -source

    By Aditya Kalra and Gianluca Semeraro
    NEW DELHI/MILAN, Dec 8 (Reuters) - Italy's Generali
 GASI.MI  is in talks to raise its stake in two Indian insurance
businesses as its local partner, debt-laden Future Group, looks
to exit the arrangement, three people familiar with the
discussions told Reuters. 
    Generali wants to increase its stake to as much as 74% in
both the life and non-life insurance entities in India from 49%
currently, added the sources, who declined to be identified as
the talks were private.
    Generali "wants to have a majority which could be a 74%
stake but also (could be) slightly less. Future wants to
completely exit the businesses," said one of the sources.
    Future and another Indian entity together own a 51% stake in
the life-insurance joint venture with Generali, while Future
holds all of the remaining 51% stake in the non-life insurance
venture.
    Indian insurance sector regulations https://reut.rs/2L5QIUG
 allow a foreign player to hold a maximum of 74% of a local
entity so another investor or investors would be needed if
Future were to completely exit the businesses, the first source
added. 
    The second source said Future is hoping to raise 30 billion
rupees ($400 million) by selling its entire stake in the two
businesses, adding that talks with Generali were close to being
finalised and the Italian firm was keen to raise its stake soon.
    The Indian business, Future Generali, did not immediately
respond to a request for comment. Spokespersons for Future Group
and Generali also did not reply.
    Future Generali sells life insurance and other policies
including health, motor and travel insurance in India, where it
is a relatively small player. Its life cover business has
insured 1.5 million people to date and manages assets of around
$680 million, according to its website.
    The third source said insurance was a non-core business for
Future group, which runs India's second largest retail chain
Future Retail, and talks with Generali had been taking place for
several months. 
    Future, which is facing a mountain of debt and is in dire
need of funds after being hit hard by the pandemic, is
struggling to sell its retail assets due to an ongoing legal
dispute https://reut.rs/3BV0tJG with estranged local partner
Amazon.com Inc  AMZN.O .         
    Future would use proceeds from the sale of the insurance
stakes to sustain its retail business and clear liabilities of
other group companies, the third source added.
    The deal is likely to require regulatory approval in India,
including from the insurance and competition regulators.
    While take up of insurance products is low in the country of
1.3 billion people, it is expected to grow, with investment
promotion agency Invest India forecasting an insurance market
worth around $250 billion by 2025.

 (Reporting by Aditya Kalra in New Delhi and Gianluca Semeraro
in Milan; Additional reporting by Abhirup Roy in Mumbai; Editing
by Euan Rocha, Kirsten Donovan)
 ((aditya.kalra@tr.com; +91-11-49548021; Twitter @adityakalra;))