Central Bank of India Poised to Acquire FEL Insurance Stakes . The Central Bank of India is nearing the final stages of acquiring Future Enterprises Limited (FEL) stakes in two prominent insurance joint ventures. This development comes as Future Enterprises, part of the debt-laden Future Group, undergoes insolvency proceedings triggered by its substantial financial liabilities.

Strategic Acquisition in the Insurance Sector

The state-owned Central Bank of India is expected to take over Future Enterprises’ 25% stake in Future Generali India Insurance Co. and a 33% stake in Future Generali India Life Insurance Co. This move marks a significant step for the Central Bank, which is aiming to bolster its presence in the insurance sector, where it currently holds a minority stake.

The deal is part of a broader strategy by the Central Bank to expand its footprint in financial services beyond traditional banking. By acquiring these stakes, the bank is positioning itself to tap into the growing insurance market in India, leveraging the established brand and distribution network of Generali, the Italian insurance giant that owns 74% of both joint ventures.

Insolvency and Asset Division

Future Enterprises, facing insolvency due to its inability to service ₹25,000 crore in loans, has seen its assets categorized into three primary clusters: insurance ventures, textile businesses, and other residual stakes. The decision to sell the insurance stakes comes as creditors aim to recover a portion of the outstanding debt.

The Committee of Creditors (CoC) overseeing Future Enterprises’ insolvency proceedings has accepted the Central Bank of India’s bid for the insurance assets. An official announcement is expected shortly, according to sources close to the matter.

Generali Strategic Alignment

Generali, which holds a majority stake in the joint ventures, reportedly favored partnering with a public sector lender like the Central Bank of India. This partnership is expected to enhance the distribution reach of the insurance products across India’s vast and diverse market, leveraging the bank’s extensive branch network and customer base.

Competitive Bidding and Central Bank’s Focus

The Central Bank of India emerged as the frontrunner for the insurance stakes after outbidding several other contenders, including Capri Global, JC Flowers, and Authum. Unlike its competitors, who were interested in acquiring all of Future Enterprises’ assets, the Central Bank focused exclusively on the insurance stakes. Other bidders, such as M Pallonji & Co., Kotak Alternate Asset, and Globe Capital, also expressed interest in the insurance stakes but were ultimately outbid.

The remaining assets of Future Enterprises, including two manufacturing units located in Tarapur, Maharashtra, and Mahadevapura, a suburb of Bengaluru, have attracted bids from companies like Brescon Realty, Orissa Metaliks, and Uniworth Finlease.

Future Enterprises Financial Struggles

Future Enterprises’ financial troubles culminated in insolvency after the company defaulted on loans amounting to ₹25,000 crore. In 2022, the company managed to raise ₹1,266 crore by selling a portion of its general insurance business to Generali. This sale increased Generali’s ownership in the general insurance venture to 74%, the maximum allowed under India’s foreign direct investment regulations.

Conclusion

The impending acquisition of FEL’s insurance stakes by the Central Bank of India signals a critical step in the ongoing resolution of Future Enterprises’ debt crisis and highlights the growing interest of public sector banks in diversifying their financial service offerings.