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L&T to sell 49% stake in general insurance arm

L&T to sell 49% stake in general insurance arm
Last Updated: Feb 29, 2016 | 338 Views
Engineering conglomerate Larsen & Toubro (L&T) plans to sell 49 percent in its general insurance arm to a foreign player, said a Business Standard report . L&T General Insurance Company, doesn’t have a foreign partner and is currently a wholly owned subsidiary of L&T. L&T holds 51 percent stake in L&T, while Generali & Future groups hold 26 percent and 23 percent, respectively. The deal is said to be finalised in the next 3-6 months and might be valued at Rs 1500 crore. 

The liberalisation of foreign investment ceiling from 26 per cent to 49 per cent last year through the passage of Insurance Laws (Amendment) Bill last year has opened the gateway for foreign investment in the Indian insurance industry. The bill was passed by the parliament in March clearing decks for foreign entities to increase their stake in local private sector insurance companies.  Foreign investors started putting capital into their Indian joint ventures, raising their equity holdings once the law came into effect. The insurance sector is likely to attract over Rs 12,000 crore worth of FDI by 2016, estimates an ASSOCHAM report.

 L&T reported a loss of Rs 68.5 crore for the December quarter in FY16 compared to Rs 70 crore loss the previous year. Net premium collections on the other hand rose to Rs 240 crore in the same quarter period as compared to approximately Rs 175 crore in the previous year.

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