Warburg Pincus Part Sells Shares In Amtek India; Takes 63% Hair Cut

Warburg Pincus Part Sells Shares In Amtek India; Takes 63% Hair Cut

By Pallavi S

  • 20 Nov 2010

Warburg Pincus has sold over half of its 7.45% stake in auto component firm Amtek India with an estimated 63% haircut. The private equity firm had bought the bulk of its stake in the fourth quarter of 2007, close to the peak of market valuations.

Warburg is estimated to have bought most of the shares with an average share price of Rs 175 each putting in around Rs 150-200 crore to buy over 9% stake and had been holding on to the stake for the last three years.

The stock has been on a downhill ever since and never recovered. Warburg sold shares at a price of Rs 64.96 per share on Friday pocketing around Rs 36 crore for over half of its holding.

Besides Warburg Pincus, Amtek India is also backed by other PE firms such as ChrysCapital that held as much as 8.17% as of September 30.

The share sale by Warburg Pincus comes months after the Delhi-based automotive component group’s flagship group firm Amtek Auto acquired 26.3% stake in Amtek India from the promoters in a deal worth Rs 215 crore as a part of consolidation of business under one firm. Amtek Auto bought 26.3% stake in Amtek India at an average price of Rs 64.8 a share.

The transaction was part of an agreement where Amtek Auto is to buy 40.2% stake owned by the promoters in Amtek India at a price not exceeding Rs 68 a share. A mandatory open offer to buy an additional 20% stake or 2.5 crore shares of Amtek India is pending. This is expected to give Amtek Auto majority holding of Amtek India and thereby consolidate its financial numbers.

Incidentally, Warburg Pincus is also an investor in Amtek Auto, holding as much as 5.78% as of September 30. The PE firm had bought the shares as long back as mid 2006 when share price was ruling around Rs 250-300 per share as against ruling market price of Rs 146. Amtek Auto is also backed by ChrysCapital among other institutional investors.