India: Mahindra Group open to pare stake in units, tap IPO, PE funding routes

Mahindra Group, the $18 billion conglomerate with businesses from India’s largest SUV maker to financial services and farm equipment, is prepared to pare stakes in its publicly traded units to facilitate fundraising by the companies.

The group is ready to cut its shareholdings in six listed entities to less than 51 percent, including Mahindra & Mahindra Financial Services Ltd., which has a market value of 210 billion rupees ($3.1 billion) — if the strategy they’re pursuing calls for it, Chief Financial Officer V.S. Parthasarathy said in an interview in Mumbai. Mahindra will also encourage unlisted group companies to tap private equities for investment and list on stock exchanges.

Mahindra’s readiness to loosen its reins is aimed at increasing stakeholder returns, a move that would benefit the group as a shareholder, Parthasarathy said. Such a shift in strategy would follow in the footsteps of India’s largest conglomerate Tata Group, which has been gradually reducing its stakes in listed companies.

“Mahindra Group will enable the group companies to pursue their growth strategies,” Parthasarathy said on Oct. 10. “They will not stand in the way of these companies accessing growth capital to enhance stakeholder value only on the grounds that the parent’s holding might be diluted.”

Listed Companies

Led by Chairman Anand Mahindra, the parent company holds stakes in listed entities ranging from 21.7 percent in Mahindra CIE Automotive Ltd., a manufacturer of car components, to 75 percent in Mahindra Holidays & Resorts India Ltd., which runs membership plans for vacation resorts.

Its other listed companies include Mahindra & Mahindra Ltd., India’s biggest manufacturer of sport-utility vehicles; Korean automaker SsangYong Motor Co.; Mahindra & Mahindra Financial Services Ltd.; software company Tech Mahindra Ltd., Mahindra Lifespace Developers Ltd., a real estate developer; EPC Industries Ltd., which manufactures industrial systems including sprinklers; and Swaraj Engines Ltd., a maker of tractor engines. It holds 26.8 percent in Mahindra & Mahindra, and 36.32 percent in Tech Mahindra.

The group empowers all its listed entities and their leaders to operate the businesses on their own rather than micro-managing them, Parthasarathy said. “Value creation is more important than control,” he said.

Stock Listings

Unlisted Mahindra entities are free to tap private-equity investments to fuel growth and are encouraged to pursue stock listings when “appropriate,” Parthasarathy said. He declined to identify companies that are preparing to sell shares.

Mahindra & Mahindra fell 0.8 percent to 1,359.50 rupees at 12:30 p.m. in Mumbai trading. Mahindra & Mahindra Financial Services dropped 1.3 percent to 365.05 rupees. SsangYong Motor gained 1.8 percent to 8,000 won in Seoul.

Mahindra has capital expenditure plans of 100 billion rupees ($1.5 billion) across companies for the next three years, Parthasarathy said. The group, which in September sold 4.75 billion rupees of 10-year bonds, plans to raise more funds via foreign and domestic routes, he said.

“The company has also cash and cash equivalents to meet the funding requirements,” Parthasarathy said. “The rationale behind raising bonds is to have some leverage on the balance sheet and use windows of opportunity.”

Bloomberg

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.