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Actis eyes exit as Endurance Technologies files for IPO

09 July, 2016

Aurangabad-based auto components maker Endurance Technologies Ltd is looking to be second-time lucky to go public. The firm that had earlier filed its draft red herring prospectus (DRHP) with capital markets regulator Securities and Exchange Board of India (SEBI) in September 2011 but later withdrew it in November 2011, has refiled its papers in an offer-for-sale issue.

The IPO would see its five-year-old private equity investor Actis exit. Promoter Anurag Jain is also looking to sell some shares in the public issue.

This is the second portfolio firm of Actis looking to go public. Earlier AGS Transact had received approval for its IPO but did not go ahead with the planned issue and its approval expires last month.

Endurance adds up to around two dozen firms that are in the queue to go public. Of these, three-fourths have a PE firm as a shareholder and in many cases the investor is looking to part or full exit the respective private firms.

Here’s a snapshot of Endurance Technologies IPO:

Issue: Offer for sale of 19.29 million shares by Actis and 5.3 million shares by the promoter.

Bankers: Axis Capital and Citigroup.

Company

Founded in 1999 as Endurance Suspension Systems (India) Pvt. Ltd, the firm went through group consolidation (group firm started business in 1985) and changed its name in 2010. It claims to be the largest two-wheeler and three-wheeler automotive component manufacturer in India in terms of aggregate revenue for FY15 in its selected product segments.

In India it makes raw and machined aluminium castings, such as high-pressure, low-pressure and aluminium alloy wheels for motorcycles; suspension, such as shock absorbers for scooters, motorcycles and three-wheelers, front forks for motorcycles and scooters and hydraulic dampers for quadricycles; transmission, such as clutch assemblies for motorcycles and three-wheelers and brake systems among other products. In Europe, it largely caters to four-wheeler OEMs, focusing on engine and transmission components.

Its key customer in India is Bajaj Auto though it also serves Royal Enfield, Honda Motorcycle and Scooter India, Yamaha, Hero MotoCorp, M&M, Tata Motors and Fiat India. In Europe, its largest customer is FCA Italy S.p.A. and its group companies are supplying components used in the engines of a variety of brands, such as Jeep, Chrysler, Alfa Romeo, Abarth, Fiat and Lancia. It also supplies to Daimler and others.

Around 70% of its revenues is derived from the home market with the rest coming from Europe. The firm has 25 plants, including 18 in India.

In addition to organic growth in India, it entered Europe with the acquisition of a pressure die casting and machining company in Germany in FY07 and an Italian firm thereafter.

Financials

The company’s fortunes are tied to the two-wheeler industry in India and it has seen its revenue growth remain modest in single digits barring a 15% growth in FY15. The poor monsoon last year too played spoilsport and its net sales grew just 5% to Rs 5,240 crore for the year ended March 31 2016. Its net profit, however, climbed 15% to Rs 289 crore last year.

Investors

The firm had previously roped in Standard Chartered Private Equity as an investor in 2006. StanChart PE was to sell bulk of its stake in the firm when it planned an IPO in 2010. However, it had exited in a secondary PE deal where Actis came as a new investor. This time Actis is looking to exit in the proposed public issue.

Actis had invested Rs 372.5 crore to buy stake from StanChart PE and later part-exited by selling a small chunk of shares in a share buyback by the firm itself.

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Actis eyes exit as Endurance Technologies files for IPO

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