Blackstone acquiring auto component maker Agile Electric, leading management buyout of Igarashi Motors for up to $74M

Private equity major Blackstone Group is acquiring a controlling stake in Agile Electric Sub Assembly Pvt Ltd, which is engaged in the production of DC motor sub-assemblies. According to a filing with the exchange, Blackstone is buying 97.9 per cent stake in the company through a mix of fresh subscription of securities besides stake purchases from existing investors which include HBL Power Systems among some other individual shareholders, including KK Nohria, Padmanaban Mukund and Jose Joseph, for Rs 332.36 crore ($55 million).

Privately held Agile Electric holds 62.8 per cent of public listed auto component firm Igarshi Motors and the transaction will trigger an open offer. In a parallel move in the two-tier deal, Igarshi Motors’ managing director and one of the shareholders of Agile Electric, Padmanaban Mukund is going to subscribe to optionally convertible debentures which would give him as much as 32 per cent of Igarshi Motors for around Rs 60 crore ($10 million).

Blackstone is making an open offer for another 26 per cent stake of Igarshi Motors which can cost it as much as Rs 51.7 crore, taking its total investment to around Rs 384 crore ($64 million). The open offer has been made at Rs 65 a share, a premium of 8.4 per cent to the last traded price of Rs 59.95 a share. The open offer is expected to cost the private equity firm Rs 51.7 crore.

Prior to the open offer and assuming full conversion of debentures by Padmanaban Mukund, Blackstone will own around 41.9 per cent of Igarshi Motors while Mukund will own 32.6 per cent.

Agile Electric and Mukund are expected to have 74.54 per cent in Igarashi Motors after OCDs are converted, and if the open offer succeeds their holding could cross 90 per cent. This may mean a de-listing could be on the cards for Igarashi Motors.

Agile Electric is involved in production of DC motor sub assemblies and has also ventured into production of AC motor and its subassemblies in 2012. The company had an annual capacity of 39.6 million components and production facilities across Chennai. Agile Electric exports majority of its products to manufacturers like Delphi Automotive, Inteva Products and Bosch.

During 9MFY13, Agile Electric reported profit after tax of Rs 4 crore on a total operating income of Rs 193 crore. Its subsidiary Igarashi Motors reported 8.3 per cent increase in revenues to Rs 291 crore in FY13 with net profit up 29 per cent to Rs 21.36 crore.

This will be the fourth buyout transaction by Blackstone in India, coming over five years after it acquired CMS Info Systems, an IT infrastructure management and outsourced business services.

Its other buyout transactions in India include apparel maker Gokaldas Exports and business process outsourcing firm Intelenet, which was sold to UK's Serco plc in 2011.

(Edited by Joby Puthuparampil Johnson)

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