Bandhan Financial Holdings has offered to buy out Future group’s stake and acquire a controlling interest in Future Generali India Life Insurance Company — a three-way joint venture between the Future Group, Industrial Investment Trust (IIT) and Generali, an Italian insurance and asset management giant.
The holding company of Bandhan Bank is willing to pay a control premium to buy Future Group’s 34% and another 17% stake in the unlisted company, three people familiar with the development told ET. Generali owns 49% in the JV while IIT holds 17%.
“There have been preliminary talks. Bandhan is keen but may not be willing to pay too high a premium.And while Future may be open to cash out, it would also depend on what Generali has to say…,” said a person familiar with the matter.
Bandhan founder Chandra Shekhar Ghosh and Future Group founder Kishore Biyani declined to comment.
According to the agreement between the shareholders of the company, Generali will have a say in any such transaction.
The negotiations are revolving around who would have the controlling power, people in the know said. Bandhan has made it clear that it would go for the deal only if it gets a majority vote. Generali also has the option to raise its stake with the Indian law now permitting an overseas partner to hold up to 74% in local insurance ventures.
Generali did not comment on the matter.
“Bandhan is powerful in the financial services sector with its wide distribution network, while Generali without a strong local partner would not have distribution or scale. But Generali may not give it up easily given the opportunity available in India’s under-penetrated insurance market,” said another person who is tracking the development from the close quarters.
The deal, if goes through, would be a win-win for the Bandhan Group, which has cash for big-ticket investment and a distribution network to sell third-party products, and Kishore Biyani’s Future Group, which is known to be keen to monetize its stake ever since it is facing liquidity tightness following the pandemic-led disruptions.
Comments sought from Future Generali, Bandhan Group, Future Group and IIT did not elicit any response.
In August 2020, Bandhan Financial Holdings pared its stake in Bandhan Bank to 40% from 61% for a sum of Rs 10,600 crore. The holding company is expected to use part of the sum it received for the proposed insurance foray.
Bandhan had last year shown interest in getting a controlling stake in Reliance Nippon Life Insurance. Flikart’s co-founder Sachin Bansal was reportedly negotiating with Future Generali Life promoters for buying Biyani’s stake in 2020 but talks did not progress.
Future Generali India Life collected Rs 523 crore of the first premium in FY21 while had written gross premium of Rs 1322 crore, which was 11% less from the preceding fiscal. It made a loss of Rs 158 crore in the last.
The Indian life insurance sector – two decades after its liberalization – is at an inflexion point, said an Emkay Global Financial Services report. “It is set to enter into a multi-decade growth rebound era, powered by economic growth and favourable demographic changes amid very high and rising mortality protection gap and longevity (Retirement) savings gap,” the brokerage firm said.
