Mumbai: Local private equity fund Tata Opportunities Fund will purchase a significant minority stake in Aurangabad-based auto component maker Varroc group for $60 million, or Rs 272 crore, two people with direct knowledge of the development said.
India's third-largest auto components maker will use the money to build new products and to expand its presence in Europe and emerging markets. "Tata Opportunities Fund is investing $60 million in Varroc for a substantial minority stake," an investment banker with knowledge of the development said. According to him, the company with sales of more than Rs 800 crore is also looking at widening its customer base to Europe and other emerging markets.
Promoted by first generation entrepreneur Tarang Jain, Varroc began selling auto components to Bajaj Group in late 90s and later to other vehicle makers. "Based on further capital requirement, the company might look at another round of fund raising in future," another person with knowledge of company's plans said.
Varroc group managing director Tarang Jain and Tata Opportunities Fund spokesman Rishaad Bilimoria didn't respond to email questionnaire.
Varroc had grown through acquisitions in the global market. In 2012, it acquired US-based Visteon Lighting for $100 million, helping it to ramp up its presence in Mexico and Chezch Republic.
"Some capital will go towards expanding the Visteon business," the banker quoted above said. Visteon supplies products to global automobile majors such as Ford, General Motors, Volkswagen and Jaguar Land Rover.
Private equity and strategic investors have started investing in auto component makers as slowing economy offer them cheaper assets. Last week, ET reported Japanese auto major Mitsubishi's plans to invest in Comstar, a South India-based company. PE fund Actis bought roughly 12 per cent stake from Standard Chartered Private Equity in Endurance Group for $71 million. Low labour costs, availability of skilled labour and high quality products among Indian vendors have spurred the growth of auto component exports from India.
No comments:
Post a Comment