Mumbai’s City Civil & Sessions Court on Monday prevented Future Enterprises from selling its stake in its general insurance joint venture business with Italy’s Generali after it faced legal challenge by a group representing bondholders, a person familiar with the development said.
The court in its ex-parte order has directed Future Enterprises to hold the stake sale until the next hearing. The matter will now be heard on 10 March.
IDBI Trusteeship had moved the court where it was representing the foreign bondholders who subscribed to Future Enterprises companies that had defaulted. The bondholders had rights mandating Future Enterprises not to dilute its Future Generali Stake.
Future Enterprises on 27 January announced that it had agreed to sell 25% stake in its General Insurance joint venture—Future Generali India Insurance Co Ltd to its joint venture partner Generali Participations Netherlands N.V (Generali) for ₹ 1,252.96 crores, along with an additional consideration that is linked to the date of the closing transaction.
The transaction however, is subject to necessary regulatory approvals and other customary conditions.
Currently Future owns 51% stake in the joint venture while Generali owns 49%. The foreign direct investment in insurance in India was 49% till March 2021, when it was raised to 74%.
Generali has also acquired an option to buy out the Company’s remaining interest in Future Generali India Life Insurance Company, directly or through a nominee, at an agreed valuation subject to applicable regulatory approvals.
The transaction is subject to applicable regulatory approvals and other customary conditions.
The Competition Commission of India had previously approved Generali’s purchase of a 16 percent stake in the Life Insurance Joint Venture, Future Generali India Life Insurance Company Ltd (“FGILICL”), held by Industrial Investment Trust Limited.
It has also committed to invest up to 330 crores in Future Generali India Life Insurance Company in tranches to help fund its growth plans. Generali will gain a majority ownership and control in both Insurance Joint Ventures as a result of these agreements.
Future Enterprises has received offers from potential buyers for its remaining 24.91% interest in Future Generali India Life Insurance Company. It is also exploring options for the sale of its 33.3% interest in the Life Insurance JV and expects to complete the exit of its holding in the Insurance Joint Ventures in a time bound manner to meet its commitment under One Time Restructuring Plan implemented under August 6, 2020 circular issued by Reserve Bank of India in relation to Resolution Framework for Covid-19 related stress.
Source: Mint