Mahindra & Mahindra Plans Rs 500-Crore Private Placement
Indian family business houses are increasingly looking at private equity as a source of funding. The country’s top utility vehicle maker Mahindra & Mahindra is considering a private equity placement to raise about Rs 500 crore on a preferential basis, The Economic Times reported, quoting sources. A board meeting of the company on Saturday would decide the future course of action.
This is the third time Mahindra group raising external equity. The group company Mahindra Holidays & Resorts had raised Rs 80 crore ($20 million) from State Bank of India. Mahindra also tied up with Indian private equity firm ICICI Ventures to buy Italian gear maker Metalcastello for an undisclosed sum. However, this is the first time the group’s flagship company is looking at raising private equity.
Earlier, another family business house - TVS Group - roped in Goldman Sachs as an investor in TVS Logistics. This was the first private equity investment into the Chennai-based group. This will also be M&M’s first attempt to raise money through a private placement. The company had gone in for overseas ADR issues and local offerings in the past. The tight credit markets and volatile public equity markets are forcing companies to think differently.
M&M plans to spend Rs 9,000 crore over the next three years to double its capacity to 650,000 vehicles. The company also needs money for acquisitions in its auto component business. It has spent more than $300 million in a string of acquisitions so far in an attempt to build a component business worth at least $1 billion.
Mahindra had also lost out with buyout firm Apollo Partners in the race to buy Ford Motor’s Jaguar and Land Rover brands. Its rival Tata Motors has bought ou the luxury brands for $2.3 billion. Mahindra will continue to look at other acquisition opportunities in India and abroad.
