Mumbai: Italian insurer Generali Group, which has joint ventures with Kishore Biyani’s Future Group in both life and general insurance, has begun talks to buy a 26% stake in Reliance General Insurance Co. Ltd, said two persons with direct knowledge of the matter, who spoke on condition of anonymity as the buyers are yet to be shortlisted.
Reliance General Insurance, the non-life subsidiary of Anil Ambani’s Reliance Capital Ltd, is negotiating with Canada’s Intact Insurance Co. and Germany’s HDI-Gerling International Holding AG to sell a 26% stake for about Rs 1,500 crore, Mint reported on 24 May.
An email sent on Thursday to a top executive of Future Generali India Insurance Co. Ltd, the non-life joint venture, did not elicit a response till press time. A Reliance Capital spokesperson declined to comment.
A file photo of Anil Ambani
To form a joint venture with Reliance General, Generali will have to exit its non-life JV with Future Group as under Indian law a foreign firm can have a stake in only one domestic insurer in the same space. UBS Securities India Pvt. Ltd is advising Reliance General on the deal.
Reliance Capital is scouting for foreign partners for its various financial services ventures to help lower its debt. Under Indian regulations, insurers can sell up to a 26% stake to a foreign partner.
“Between October and March 2011, we have managed to reduce our debt by Rs 2,700 crore. Another around Rs 1,500 crore that we will get from Nippon Life in lieu of the asset management company’s stake will also be used to reduce debt,” a Reliance Group executive said in the 24 May Mint report.
The stake sale in Reliance General is expected to bring down Reliance Capital’s debt to around Rs 1,000 crore from around Rs 4,000 now.
Generali Group has assets of at least €460 billion with a total premium income of around €69 billion in 2011, according to its website. There are 26 general insurers in India that underwrote a gross premium of Rs 6,506.51 crore in April. Future Generali underwrote a premium of Rs 108.68 crore from its non-life business during the month.