According to source, both sides have agreed on a valuation of around Rs 1,600 cr
The Kishore Biyani-promoted Future Group, which runs the country's largest retail firm, is set to exit from the life insurance venture that it operates in partnership with Italy's Generali.
Future is in advance discussions with the Mumbai-based Industrial Investment Trust (IITL) to sell a controlling stake in a phased manner, two people familiar with the development told ET. A top official, who is also member of the board in one of the companies involved in the transaction, said that, "both side have agreed on a valuation of around . 1,600 crore, which might change marginally depending upon the outcome of the due diligence process."
The debt-laden Future group is planning to sell non-core assets and focus on its retail business. Future had entered the life insurance business hoping to use its vast network of retail stores and consumer footfalls to sell insurance. But Pantaloon's debt burden and the insurance business' constant need for cash meant that Future had to take a call on where it needed to invest money. The group is also in talks with prospective investors to sell stake in Future Capital Holdings but the insurance deal is expected to happen before.
Kishore Biyani was unavailable for comment. But two officials close to the development confirmed that discussions were underway and have reached an advanced stage. KK Rathi, who oversees the group's financial decisions, is understood to be handling the deal. IITL is already planning to raise capital to fund the transaction and has already called a board meeting on November 22, to discuss plans. The money will be raised through issue of shares on a preferential basis, one person said.
It will buy 24% in the first phase by investing directly in the company and becoming Generali's new partner, he added. Future's stake will drop to 50%. "Since the JV has not completed five years of operation, the existing Indian promoter will not be able sell in the first round," he said. In the second round that is expected to be completed after the JV completes five years next year, Future will sell its remaining stake either in part or in full to the new partner, he said.
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