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This is the first private equity deal in the defence and nuclear space. The US private equity fund Blackstone has announced an investment of $65 million in the Hyderabad based MTAR Technologies Pvt Ltd, a company that provides components to the Indian defence and aerospace establishment. The funding will be a mix of primary and secondary equity. Some media reports suggest that Blackstone has picked up 26 per cent stake in the company. MTAR will continue to be led by the original founders - P. Ravindra Reddy, Satyanarayana Reddy and P. Jayaprakash Reddy - who will retain a 74 per cent stake.
MTAR manufactures precision machined parts for nuclear power reactors, and engine and structural components for aerospace and defense applications. It has clients like Nuclear Power Corporation of India Ltd, Indian Space Research Organisation, and Hindustan Aeronautics Ltd, all in the government sector.
Akhil Gupta, Chairman of Blackstone Advisors India Pvt Ltd, said: “MTAR is a sector leader with very unique skill-sets, capabilities and in-depth understanding of a very niche and high potential industry. We foresee a huge growth opportunity for MTAR both in domestic and global markets.”
MTAR has apparently indigenously developed a grid plate technology to be used in the 500 MW prototype fast breeder nuclear reactor project coming up at Kalpakkam in Tamil Nadu. The company has won awards from the Defence Research and Development Organisation for defence absorption. The deal is subject to regulatory approval. First Securities was the advisor in the transaction.
The Economic Times adds: According to MTAR chairman P Ravindra Reddy, the funds will be used for the expansion of their manufacturing facility for nuclear and aerospace apart from diversifying into oilfield equipment. Currently, the company has an order book of Rs 250 crore executable over two years. MTAR’s revenues are undisclosed, but the management is aiming to raise it four to five times by 2010.