Citigroup’s private equity arm, Citigroup Venture Capital International (CVCI) is acquiring 'a substantial stake' in Sansera Engineering Pvt Ltd, a company engaged in the manufacture of high-precision critical automotive engine and aerospace components. CVCI is picking up the stake in the Bangalore-based company, which exports equipment to marquee brands like Ducati and Harley Davidson, by investing around Rs 340 crore ($56.5 million).
After the deal closes, the company's management and CVCI will be the only shareholders in the company. The deal with CVCI has both primary and secondary components, including share purchase from Monsoon India Inflection Fund. The hedge fund, which invested in the company in 2006, part exited the firm through buyback of shares in previous fiscal, said sources.
Italian automotive company Streparava SPA, which also invested in 2006, is also exiting, FR Singhvi, joint managing director of Sansera, confirmed. While declining to comment if the deal is a majority stake sale, Singhvi said the management of the company remains the same post the transaction. CVCI will have a representative on the company’s board.
"This partnership gives us the additional financial strength and international credibility to take advantage of the ongoing developments in the global supply of automotive and aerospace components which Indian companies are seeking to play a role in,” said Singhvi.
Sansera began commercial production in 1987 and currently supplies products to over 20 customers in India and globally. The company reported consolidated revenue of approximately Rs 550 crore for the year ended March 31, 2013. Sansera's revenues grew 6 per cent in FY13; the management expects the company to grow faster than the industry in the coming year.
Sansera expects to see increasing revenue contribution from exports, from current 15 per cent to 20 per cent in the coming year. It also expects exports to be driven by orders from its existing customers for overseas markets. For instance, last year Sansera got an order from Maruti Suzuki for the Indonesian market. It expects similar orders from Yamaha and Honda.
The auto component sector continues to see regular private equity action though it may not be one of the favourite sectors for PE funds. This year, KKR & Co acquired a controlling stake in the Alliance Tire Group (ATG) while Warburg Pincus picked up a minority stake in auto component maker Avtec.
In the latest deal, Singapore-based private equity firm Nalanda Capital picked up nearly 8 per cent stake in auto ancillary firm NRB Bearings from the markets.
For CVCI, which was one of the prolific private equity investors in India during the bull run (2005-08), this deal comes after it invested $137.75 million (Rs 764.66 crore) in travel operator Cox & Kings Ltd’s subsidiary Prometheon Holdings (UK) Ltd last year.
In June 2011, it led a third round of funding worth Rs 65 crore in Bangalore-based microfinance institution Janalakshmi Financial Services and picked up stake from the markets in Financial Technologies (India).
(Edited by Joby Puthuparampil Johnson)