Future Enterprises sells 25% in general insurance JV; stock hits 5% lower circuit

Shares of Future Enterprises hit a 5% lower circuit in opening trade on Friday after the debt-laden company announced the sale of a stake in a general insurance joint venture, Future Generali India Insurance Company (FGIICL). The crisis-hit company has sold a 25% stake in FGIICL to its partner Generali Participations Netherlands N.V. for ₹1,266.07 crore to repay its debt. Recently, the company had missed repayment of loans to its lenders on several occasions and faced the risk of bankruptcy proceedings.

“The company had agreed to sell a 25% stake in its general insurance joint venture, Future Generali India Insurance Company Limited (FGIICL) to its joint venture partner, Generali Participations Netherlands N. V. (Generali), subject to the receipt of the necessary approvals from governmental and regulatory authorities,” Future Enterprises says in an exchange filing.

As per the company, the transaction was completed on May 5, following the receipt of the key approvals from governmental and regulatory authorities. Post the transaction, the Future group company continues to hold (directly and indirectly) 24.91% shares in FGIICL.

In a separate filing on May 4, Future Enterprises informed the exchange that CARE Ratings has downgraded the ratings of the company’s debt instruments. The agency has revised the rating of the firm’s non-convertible debentures (NCDs), fixed deposits, as well as short and long-term bank facilities to “issuer not cooperating” categories as the cash-strapped company failed to pay the surveillance fees for the rating exercise.

“The company has not paid the surveillance fees for the rating exercise agreed to in its rating agreement. In line with the extant SEBI guidelines, CARE Ratings Ltd.’s rating on the company’s bank facilities and instruments will now be denoted as CARE D; ISSUER NOT COOPERATING,” the filing says.

Reacting to the news, shares of Future Enterprises opened lower at ₹3.80 against the previous closing price of ₹3.91 on the BSE. Extending opening losses, the stock fell as much as 4.85% to touch a 52-week low of ₹3.72. In comparison, the BSE Sensex was trading 733 points lower at 54,968 levels. Future Enterprises shares had hit its 52-week high of ₹13.92 on June 16, 2021.

Future Enterprises shares have been under selling pressure for the last 10 sessions and have plunged 42% during this period. The stock has fallen 62% on a year-to-date basis, 42% in a month, and 15% in the last week.

Kishore Biyani-led Future group companies have witnessed a sharp decline in their market valuations since April 25 after Reliance Industries called off a ₹24,713 crore deal with Future group to acquire its retail, wholesale, and logistics and warehousing assets. The decision was taken after secured creditors of Future group voted against the deal, citing lower valuation by Reliance.

Creditors of cash-strapped Future Group are considering dragging all listed companies under the bankruptcy process to recover their dues. As of January 31, 2022, Future Consumer, Future Retail, and Future Enterprises owe more than ₹28,000 crore to a consortium of lenders to the group including Bank of India, State Bank of India, Union Bank of India, Bank of Baroda, and IDBI Bank, among others.