Private equity firm Carlyle said Thursday it has forayed into India’s auto parts industry with the acquisition of a controlling stake in a company created by merging two component manufacturers.
The PE firm bought the stake in the entity combined after the merger of Highway Industries Ltd and Roop Automotives Ltd to create the auto component platform, it said in a statement. It didn’t disclose the financial terms.
The announcement comes nearly three months after VCCircle first reported in November last year that Carlyle was looking to buy Roop and Highway Industries for about $400 million. VCCircle also reported in December that the PE for acquiring a stake of about 69% in the merged platform of Haryana-based Roop and Punjab-based Highway Industries.
Under the two-stage transaction, Roop Automotives first completed a share swap with the controlling shareholder of Highway Industries. Subsequently, Carlyle picked up a majority stake in the entity.
“We believe India offers a tremendous opportunity in the advanced manufacturing sector, particularly in the auto components supply chain for both domestic and export markets. We believe creating scale with consolidation will enable investments in technology, talent and systems, which will allow the platform to deliver an enhanced value proposition for its customers," said Amit Jain, MD and head of Carlyle India.
The transaction marks Carlyle’s first investment in the Indian auto-parts industry since it entered the country in 2000 and set up its Mumbai office in 2005. The PE firm has thus far invested mostly in banking and financial services, technology, and healthcare sectors with a few deals also in logistics and consumer services.
Roop Automotives was set up in 1990 by Mohit Oswal, Gaurav Jai and PK Salhotra. It is one of the largest manufacturers of steering hot forged yokes in the world. The company has been manufacturing steering column yokes since 1992. It makes 38 million yokes per year in more than 200 different variations, as per its website.
Umesh Munjal-led Highway Industries started in 1971 and is engaged in forging and precision machining. The company has four factories – three in Ludhiana (Punjab), and one in Pune (Maharashtra). It makes drive line and braking products, steering and body parts, suspension, differential gears and assemblies, gears and shafts, and engine components.
Carlyle also said that Roop’s Oswal will serve as non-executive chairperson of the board for the platform entity. Additionally, Carlyle executive Mark Blaufuss and Kishore Saletore, former executive director and Group CFO at Bharat Forge Ltd, will join the platform entity’s board of directors.
KPMG, Trilegal, Kotak and Deloitte acted as advisors to Carlyle for the transaction. Singhi Advisors and KPMG acted as the financial advisors to Highway and Roop shareholders, respectively.
Carlyle joins a few other PE firms betting on India’s auto components sector. Bain Capital invested in RSB Transmissions last year while Warburg Pincus picked up a controlling stake in Imperial Auto Industries in 2022.
Blackstone acquired Comstar Automotive in 2017 and Sona BLW Precision Forgings Ltd the following year. It later combined the two companies and took the merged entity public. Blackstone exited Sona last year with high returns.
Indian PE firm Kedaara Capital had also invested in the sector with bets on Bill Forge and Sunbeam Auto. Kedaara exited Sunbeam last year taking a write-off.
