L&T Finance to buy 50% in Future's life insurance JV for Rs 600 cr

Kishore Biyani-led Future Group has agreed to sell 50 percent stake in its life insurance business, Future Generali General Insurance (FGGI) , to L&T Finance for around Rs 550-600 crore, CNBC-TV18 reported today.

Pantaloon Retail would offload the stake through direct and indirect transfer to L&T Finance Holding.The contours of the deal are being finalised and an official announcement is expected today. This deal is part of Future Group’s strategy to cut down its mounting debt and focus on the organised retail sector. Cash generated from the deal will go towards retiring debt.

[caption id=“attachment_674508” align=“alignleft” width=“380”] Of the 74 per cent, Biyani’s flagship Pantaloon Retail , directly and via special purpose vehicles, holds 50 per cent while 24 per cent is held by the Biyani family.[/caption]

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Formed in 2007, Future Generali is a JV between Future Group and the Generali Group of Italy. The Future Group owns 74% stake in the company while the Italian insurer owns 26% - the highest permissible under Indian laws.

The deal will be routed through L&T’s general insurance arm and subsequently it will merge with Future Generali Indian Insurance Company.

L&T will hold 51 percent in the merged entity; Generali will hold 26% and the rest (24 percent stake) will be owned by Future Group.

Future Group had earlier said it planned to exit its non-core businesses and concentrate on the core retail operations.Since last year, Biyani through various deals has been trying to cut his estimated debt of Rs 7,800 crore.

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Early this month, he divested 22.5 percent (of Pantaloon Retail and the Future group) in Future Generali Life Insurance for Rs 300 crore to Industrial Investment Trust.

He also sold 50.1 percent stake in the Pantaloon department store to Aditya Birla Nuvo for Rs 1,600 crore and also transferred a debt of Rs 800 crore.