India: Warburg set to exit Avtec, sell 30% stake to promoter C K Birla Group

From Warburg Pincus homepage

US-based private equity (PE) firm Warburg Pincus is set to exit its investment Avtec Ltd, with Avtec’s promoter—the CK Birla group—offering to buyout the PE investor’s stake.

Avtec is part of the CK Birla group, a conglomerate with a combined revenue of $1.6 billion and over 20,000 staff. Avtec is a major manufacturer of powertrain and precision-engineered products. It supplies high precision components like cylinder heads, cylinder blocks, crankshafts, camshafts, cam rods and transmission gears for automotive, off-highway, agriculture and railway industries.

Avtec supplies to automotive and off-highway companies such as Allison, BEML, Caterpillar, Daimler, Ford, General Motors, Renault-Nissan, Tata-Jaguar and others. In India, the company has manufacturing units at Hosur, Chennai, and Pithampur. Warburg had picked up the 30% stake in Avtec in 2013 for an undisclosed amount, providing exit to the company’s previous investor Actis. Actis had invested $17.8 million in Avtec in 2005.

“Warburg Pincus held 30% equity stake in Avtec as an investor for a period of over 4 years. Exit process has now been initiated. One of the group companies of the CK Birla Group will take over 30% stake shortly and with this, the entire equity is with the CK Birla Group,” said Prabhakar Kadapa, chief executive and managing director at Avtec.

According to a person aware of the development, the transaction is expected to value the company at around $125-150 million. “Warburg had appointed investment bank Kotak Mahindra Capital to seek buyers for its stake and had been in discussions with potential buyers for few months,” the person said, requesting anonymity as he is not authorized to speak with the media.

Emails sent to Warburg Pincus and Kotak Mahindra Capital did not elicit any response.

In the last couple of years, Warburg Pincus has seen several exits (part or complete) from its Indian portfolio.

In March 2018, the PE investor sold stake worth Rs529 crore (about $81.2 million) through the IPO of its portfolio firm Lemon Tree Hotels Ltd. Warburg Pincus, which had invested about Rs300 crore in 2006 for a 24% stake in the company, sold 12% of its stake in the IPO. Also in March, Warburg sold its investment in logistics firm Continental Warehousing Corp. (Nhava Seva) Ltd. On 18 March, Hindustan Infralog, a joint venture between Dubai-based port operator DP World and the National Investment and Infrastructure Fund, announced that it was acquiring 90% stake in Continental Warehousing. Warburg Pincus held a 40% stake in the firm. Warburg had invested in the logistics operator in 2011.

Warburg Pincus also part exited its investment in financial services company Capital First in May 2017, when it sold a 25% stake to investors including Singapore’s sovereign wealth fund GIC Pte. Ltd.

Warburg acquired a 42.73% stake in Capital First, formerly known as Future Capital Holdings Ltd, from Pantaloons Fashion and Retail Ltd in 2012 and, subsequently, an additional 24.43% stake through an open offer in October that year.

The American private equity firm is also looking to make a part exit from its investment in jewellery retail chain Kalyan Jewellers India Ltd.

Last year, Warburg sold shares worth Rs530 crore in a part exit from AU Small Finance Bank Ltd, through the bank’s IPO.

This article was first published on livemint.com

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.