Debt-laden Videocon Industries Ltd. will sell its entire 51.32 percent stake in its general insurance business to Diamond Dealtrade Ltd. and Enam Securities Pvt Ltd. for an undisclosed amount.
“We wanted to bring on board promoters who had the capability to invest, who have a strong balance sheet and are also aligned with the existing strategy in terms of the growth plans of the company,” Roopam Asthana, chief executive officer and whole-time director of Liberty Mutual Insurance told BloombergQuint in an interview. Both the incoming promoters will have to remain locked-in for at least five years
Liberty Videocon General Insurance will be renamed as Liberty General Insurance Company Ltd., according to a stock exchange filing. U.S. based Liberty Mutual Insurance Group holds 49 percent stake. Diamond Dealtrade, part of the Gurugram-based DP Jindal group, will own 26 percent and Enam Securities will hold 25.32 percent.
Venugopal Dhoot-led Videocon was named among the second list of stressed companies that the central bank had identified for resolution under the Insolvency and Bankruptcy Code. State Bank of India moved the National Company Law Tribunal to initiate insolvency proceedings against Videocon.
The company had a debt of Rs 43,000 crore, according to a Care Ratings report of June 2016. More than half of it was dollar-denominated and the rest was from Indian lenders.
The insurer expects to touch a revenue of nearly Rs 800 crore by the end of March 31, 2018, said Asthana. The company has making losses for the last five years since its inception, has grown at an annualised rate of 40 percent, and expects to break even in another 2-3 years. “If we continue to grow at the kind of rate we are growing we will need about Rs 400-500 crore capital for the next couple of years,” he added.