Future Group on Tuesday confirmed that
Larsen & Toubro will buy 51 per cent stake in its general insurance joint venture with Italy's Generali. The three companies have signed a non-binding term sheet for the merger of L&T General Insurance Company (LTGI) and Future Generali India Insurance Ltd (FGI).
The sources have put the deal at over Rs 560 crore, however, the company has not disclosed the valuation of the stake purchase yet.
Media reports on Monday have said that L&T Finance is planning to buy Pantaloon Retail's 50 per cent stake in the general insurance business of Future Generali.
"On completion of the merger, L&T and Generali would acquire such number of shares as would result in L&T having a 51 per cent stake, Generali having a 26 per cent shareholding and the balance to be held by Future Group in the merged entity," Future Group said in a statement.
The deal values Future Generali India Insurance Company at around Rs 1,100 crore. Sources said as per the contours of the deal, Pantaloon Retail exited the venture by selling its entire stake.
At present, Future Group holds 74 per cent stake in the Future Generali India Insurance Company, while the remaining 26 per cent is with Italy-based Generali Group.
Out of Future Group's 74 per cent stake, 50 per cent was with
Pantaloon Retail and 24 per cent with the promoter of the retail chain Kishore Biyani family.
L&T General Insurance is a wholly owned subsidiary of $12.8 billion engineering and construction major L&T. The L&T Group has identified financial services space as a strategically important business for the Group.
LTGI started operations in 2010 and for the year ending March 2012 had a gross written premium of Rs 143 crore. LTGI operates out of 15 branches and has issued more than 1.50 lakh policies.
FGI achieved a gross written premium of Rs 1,034 crore for the year ending March 2012 and has issued over 8.40 lakh policies. The company has 83 offices.
Earlier this month, Pantaloon Retail had sold 22.5 per cent stake in Future Generali Life Insurance to investment company IITL for an estimated value of over Rs 300 crore.
The deal valued the JV at over Rs 1,330 crore.
The move was aimed at helping Future Group to pare some its debt.
Future Group, which runs stores under formats like Big Bazaar, Food Bazaar, e-zone is estimated to have a consolidated debt of Rs 6,000 crore.
With PTI inputs
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