Sachin Bansal eyes Biyani insurance JV2 min read . Updated: 01 Sep 2020, 06:44 AM IST
Future Generali Life is a three-way joint venture, in which Future Group holds a total of 34%, Industrial Investment Trust Ltd. holds around 17% and Generali holds about 49%
MUMBAI : Flipkart co-founder Sachin Bansal-led Navi Technologies Pvt. Ltd is in advanced discussion to buy out Kishore Biyani’s Future Group’s life insurance JV arm Future Generali India Life Insurance Co. Ltd. in a deal valuing the insurance firm at ₹1,400-1,500 crore, said two people aware of the ongoing acquisition talks.
Future Generali Life is a three-way joint venture, in which Future Group holds a total of 34%, Industrial Investment Trust Ltd. holds around 17% and Generali holds about 49%.
“The deal has reached a formal proposal stage and will be announced soon as both parties are keenly interested in the transaction," said the first person, adding that the embedded value of Future Generali Life is at around ₹800 crore and a multiple of 1.5-2 times the embedded value is a decent valuation for the company as per the industry standards.
On 10 June Mint reported that Biyani-promoted debt-laden Future Group is planning to exit both its general and life insurance businesses by selling off its controlling stakes in the two JVs it has with Generali Participations Netherlands N.V.
Investment bank UBS is advising Future Group on the deal. “UBS doesn’t wish to comment on any such market speculation," said a UBS spokesperson.
Spokespersons from Navi, Generali and Future Group declined to comment on the story. An email sent to Industrial Investment Trust did not elicit a response.
On Saturday, Future Group sold its key businesses including retail, wholesale, logistics and warehousing to RIL’s subsidiary Reliance Retail Ventures Ltd. for ₹24,713 crore on slump sale basis. After the transaction, Future Enterprises Ltd will retain the manufacturing and distribution of FMCG goods and integrated fashion sourcing and manufacturing business and its insurance JVs with Generali and JVs with NTC Mills.
For fiscal 2020, Future Generali Life earned a total new business premium of ₹767.43 crore, which is 7.35% higher than ₹714.9 crore earned by the firm in fiscal 2019.
However, for the April-June period of this fiscal Future Generali Life’s new business premium stood at ₹65.66 crore, which is 56% lower than the ₹149.26 crore the insurer earned during the same period of last year.
The lockdown induced by the covid-19 pandemic has hit life insurers hard, especially those largely dependent on the agency channel rather than bancassurance channel. According to the Insurance Regulatory and Development Authority of India, during the June quarter the total new business premium of private life insurers saw a 19.2% fall year-on-year at ₹12,805.42 crore.
The latest deal will help Bansal serve his aspiration to build Navi into a full-fledged financial services group by adding multiple companies from the insurance, digital banking and fintech sectors.
After acquiring the general insurance business from DHFL this March quarter, Bansal is planning to add more insurance firms into his second entrepreneurial venture Navi Technologies.
Last year, Navi had acquired the mutual fund business of Essel Group.
Bansal marked his entry into the financial services sector by acquiring Chaitanya Rural Intermediation Development Services, an NBFC, in September 2019.
Bansal, after selling his stake in Flipkart for $800 million in 2018, has allocated a large sum into Navi Technologies (formerly BAC Acquisitions). After infusing ₹888 crore in November, Bansal, in March, led a round of ₹3,007 crore in Navi Technologies— along with participation from others.