Blackstone to acquire 12.5% in International Tractors for up to $100M
The Blackstone Group today announced that it is picking up a 12.5 per cent stake in International Tractors Limited (ITL) in a structured transaction for up to $100 million (Rs 520 crore). The investment has been made through Blackstone Capital Partners (Singapore) VI and the amount will be invested in tranches, depending on performance of International Tractors, said chairman LD Mittal.
The deal would value the flagship company of the Sonalika Group at approximately Rs 4,200 crore or $800 million. Blackstone will also have the right to appoint one director on the board of the company. International Tractors had earlier raised private equity funding from JM Financial, Citi Venture Capital International and UK’s 3i Group Plc.
VCCircle was the first to report last year that Blackstone will invest in International Tractors.
This would be Blackstone's second agriculture-related investment in India. It has earlier made foray into India’s agriculture sector by investing $54 million in Hyderabad-based Nuziveedu Seeds Ltd, which is the country’s largest hybrid cotton seed company.
While there hasn't been much PE action in the tractor segment, one of the most notable private equity investments in the tractor space took place when PE major Actis picked up majority stake during the privatisation of Punjab Tractors, along with Dabur’s Burman family. Punjab Tractors was later acquired by Mahindra & Mahindra.
International Tractors was set up in 1995 with annual turnover of $500 million and currently has 10 per cent share of the domestic tractor market, according to a statement. The company exports tractors to over 70 countries worldwide and plans to grow its position in India as well as the global markets. New Delhi-based SSV Fincorp Services was the exclusive advisor for this transaction.
Japan’s second largest tractor maker Yanmar, with whom International Tractors has a technical collaboration, holds 10 per cent-12 per cent stake in the firm.
ITL is led by L. D. Mittal (Chairman), A. S. Mittal (Vice-Chairman), and Deepak Mittal (Managing Director). The company is headquartered in Delhi with its core manufacturing plant in Hoshiarpur, Punjab.
“Favourable macro-economic trends such as rising minimum support prices and rising labour costs are leading to increased adoption of mechanisation by farmers. ITL’s cost-effective manufacturing facilities with deep value engineering and strong product development capabilities provide it with a competitive advantage to capture this market. Customers identify with the Sonalika brand for its product strength and commitment to the consumer,” said Akhil Gupta, Senior Managing Director and Chairman of Blackstone India.
(Edited by Prem Udayabhanu)
Blackstone Advisors India Pvt. Ltd. is a private equity and venture capital firm. It provides finance for leveraged buyouts, turnarounds, corporate partnerships, industry consolidations, start-ups, recapitalizations and growth capital transactions. The firm seeks to invest in communications, energy, media and entertainment, healthcare, financial services, hospitality and travel, manufacturing, technology, transportation, oil refining, construction, consumer and retail, food and beverage, packaging and pharmaceutical sectors. It prefers to invest in North America, Western Europe, Latin America, emerging European markets and India. The company was founded in 1985 and is based in Mumbai, Maharashtra.
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International Tractors Ltd. is engaged in manufacturing automobile and farm equipment. The firm offers tractors both Indian and international models; agriculture implements, silent generators, pick and carry crane, auto components and engines. It offers its products under the brand name Sonalika. International Tractors Ltd. was incorporated in 1995 and is based in Hoshiarpur, Punjab with an additional office in New Delhi, International Tractors Ltd. operates as a subsidiary of Sonalika Group.
Citi Venture Capital International Growth Fund is a $1.6 billion private equity fund managed by Citi Venture Capital International. It provides capital to companies operating in Asia and emerging European countries. The fund seeks to invest in IT services, business services outsourcing, retailing, media, telecom, renewable energy and financial service sectors.
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