Aditya Kakra and Gianluca Selaro
NEW DELHI/MILAN, (Reuters) – Three people with knowledge of the talks said that Italy’s Generali is currently in discussions to increase its stake in Indian insurance companies as the local partner, the debt-laden Future Group looks to end the arrangement.
Generali would like to grow its stake in India’s life and non-life insurers to 74% from the current 49%, according to sources. The talks are private so they could not be named.
Generali would like to own a majority that could reach 74%, but (could) be slightly less. According to one source, Future plans to sell all of its businesses.
Future along with an Indian entity own 51% each in Generali’s joint venture for life insurance. Future is the sole owner of the 51% remaining in the venture.
Indian regulations in the insurance industry allow foreign players to own a maximum 74% share of the local entity. This means that if Future wanted to exit all the businesses, another source would need to be added.
According to the second source, Future hopes to raise $30 billion ($400 million) through the sale of its whole stake in both businesses. Generali talks are close and Generali is keen to increase its stake.
Future Generali, an Indian company, did not respond immediately to a request. Generali and Future Group spokespersons also failed to respond.
Future Generali offers life insurance as well as other policies in India. This is where it’s an emerging player. According to the website, its life insurance business covers 1.5 million individuals and has assets worth $680 million.
According to the third source, insurance is a non-core business of Future group. Future Retail runs India’s second largest chain, Future Retail. Generali has been in contact for several months.
Future, which has a lot of debt after the pandemic and is now in desperate need of money, can’t sell any of its retail assets. This is because it is involved in a ongoing legal battle with Amazon.com Inc. (NASDAQ:).
Future plans to use the profits from the sale and clearing of liabilities of its group companies with the help of proceeds from the purchase of insurance stakes.
It is expected that the deal needs to be approved by Indian regulatory authorities, including competition regulators and the insurance regulators.
Despite low insurance penetration in India’s 1.3billion population, the market for insurance is forecast to rise. Invest India is an investment promotion agency that projects an Indian insurance market valued at around $250 Billion by 2025.
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