US-based Superior Industries International, Inc. has acquired an 8.7% stake in Visakhapatnam's Synergies Castings Limited. Privately-owned Synergies Castings is involved in aluminum wheel manufacturing. NYSE-listed Superior said it has entered into a definitive agreement to acquire around a 26% stake in Synergies by December 31, 2010, subject to certain conditions.
Synergies Castings is backed by AIM-listed private equity firm Kubera Cross Border Fund. The PE firm, along with the fund manager, own around a 68% stake in the firm. Kubera Cross Border had invested $21.3 million in Synergies in December 2007. When contacted, a Kubera official said that they are not making an exit at this point from Synergies.
Synergies had revenue of Rs 140 crore in FY08 which fell to Rs 85 crore in FY09 in the backdrop of global economic slowdown. The company now expected an uptick in the revenue and expects Rs 111 crore in FY10 and Rs 144 crore in FY11, according to a presentation on Kubera's website.
California-based Superior is involved in design and manufacture of aluminum road wheels for sale to original equipment manufacturers (OEM). It is a supplier of cast and forged aluminum wheels and light truck manufacturers, with wheel manufacturing operations in the United States, Mexico and Hungary.
Superior has a market capitalisation of $352 million and it reported revenues of $419 million for 2009. The revenues of the company have been declining from $957 million in 2007 and $755 million 2008.
According to CSM Worldwide, an automotive market forecasting firm, light vehicle sales in India are expected to grow nearly 14% in calendar year 2011.
"We believe this is an excellent long-term investment opportunity, given the dynamic and growing automotive market in India,” said Steven J. Borick, Chairman, Chief Executive Officer and President of Superior in a release. “Synergies is the premier player in the region and an accredited OEM aluminum wheel manufacturer. The company has existing contracts with Toyota, General Motors USA and Chrysler USA, among other major automotive manufacturers."
Kubera Cross-Border Fund was listed on AIM in 2006, raising $225 million and has till now invested $120 million in nine companies. The AIM-listed Kubera started a buyback last year where it bought back shares worth $55.3 million.
The PE firm recently exited its investment in Infotech Enterprises, making 2x. Kubera also has an investment in investment banking firm Spark Capital.
Its other portfolio companies include Kejriwal Stationary (paper-based stationary manufacturer), Adanya Inc (corporate e-learning), Venture Infotek (transaction process services), Ocimum Biosolutions (genomics outsourcing).