Bandhan Financial May Look to Buy into Future Generali Insurance

Bandhan Financial, the holding company of Bandhan Bank, plans to foray into the insurance business by picking up a stake in Future Generali Insurance. Bandhan Financial had monetized close to Rs.10,600 crore from the sale of its stake in Bandhan Bank to comply with the RBI stipulations on promoter holding in banks. This cash will now be used.

Future Generali is a 3-way joint venture between Future Group, Generali and Industrial Investment Trust (IIT). While Future group holds 34% and IIT holds 17%, the balance 49% is held by Generali group. Bandhan Financial has already made it clear that it would be willing to pay a control premium, but only if it gets management control of Future Generali. It is not keen on being a junior partner.

This is not the first attempt by the Future group to monetize its stake in Future Generali. Future group was in talks with Sachin Bansal of Flipkart some time back but the talks did not materialize. Future Group has been looking to monetize its assets but then insurance is one of the few businesses to be left with Future group after their merger with Reliance Retail.

An important factor in this entire deal will be the Generali group. This Trieste, Italy based group already has 49% and as per the modified FDI rules for insurance investments, they can take their holding in the insurance joint venture up to 74%. They would be keen to make the best of the vast insurance opportunity available in the Indian context.

For FY21, Future Generali had collected first year premiums of Rs.521 crore and total gross premiums written was Rs.1,322 crore. The business model is up and running and that will be an advantage. Bandhan bank, with its vast distribution network, will be in a position to leverage the insurance business to the hilt. In short, there are synergies in the deal.

Recent reports on the insurance industry outlook show a humongous opportunity. India is at an inflexion point wherein the gap between the longevity funding needs and the retirement savings are at their highest level. 

That makes insurance an important part of the financial plan. While neither Bandhan Financial nor Future group or Generali have commented, the battle for insurance mind share is going to be the next big battleground.