MILAN, Feb. 28 (Class Editori) — An Indian court blocked the sale by Future Enterprises Limited of its stake in the insurance joint venture with Generali Group, following a legal challenge by a group representing bondholders. This was reported by Reuters news agency after Future Enterprises Limited announced last January that it had decided to sell its 25% stake in Future Generali India Insurance (FGII) to Generali Group.
According to what has been reconstructed by the agency, the IDBI trust went to court representing the foreign bondholders who had subscribed to the securities of Future Enterprises Limited's subsidiaries in default, with the right to impose on the Indian Group not to dilute its stake in FGII.
This request was granted by the civil court of the city of Mumbai, which ordered Future Enterprises Limited not to sell its stake until the next hearing on March 10. Generali Group, as known, was the first foreign company to take advantage of the opening by the Indian government that, in 2021, raised the maximum threshold of participation by foreign companies in insurance joint ventures from 49% to 74%.
The Lion of Trieste moved immediately with the intention of tightening its grip on the two companies that were created in 2006 together with Future Group, the Indian distribution giant, in both the Non-Life and Life insurance sectors. In the Non-Life sector, in particular, the operation foresees that Generali Group will purchase from Future Enterprises Limited 25% of FGII’s shares for a consideration of approximately 145 million euros, thus reaching 74% in FGII, which is among the fastest growing Non-Life insurance companies on the market and had 450 million premiums last March.
In the Life sector, the Group signed an agreement for the acquisition of the entire share (around 16%) held by Industrial Investment Trust Limited (IITL) for a total of approximately 26 million euros in Future Generali India Life (FGIL), a company which recorded around 150 million euros in gross premiums last March.
In this case, Generali Group will have to subscribe to a reserved capital increase involving shares in FGIL (for an amount of approximately 21 million euros) and following the completion of the transaction and the completion of the reserved capital increase, it will hold an approximately 68% share in FGIL, which is expected to increase to 71% by 2022, with further reserved capital increases.
While announcing the operation, the Group managed by Philippe Donnet assured that India is one of the fastest developing insurance markets in the world, with a nominal growth rate of premiums to exceed 10% in the 2022-2030 period and Generali Group is ready to bet on the increase in insurance penetration levels —which are clearly low today, with gross premiums representing only 4.2% of India's GDP in 2020, while disposable income and private consumption is expected to grow by around 7% in the next 5 years.
The Competition Commission of India had already allowed the transaction and other authorizations were awaited, but the sentence by the Mumbai court put everything into question again. (All rights reserved)
(Source:Class Editori)
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