Kotak Private Equity Group has invested in automotive component firm Minda Corporation Ltd, the flagship of the $555 million Spark Minda or the Ashok Minda Group. The deal has seen the arm of the private sector lender Kotak Mahindra Bank acquire a minority stake in the company for around Rs 125 crore, VCCircle has learnt.
“From our perspective, auto components happen to be a growing opportunity, especially as the two-wheeler segment continues to do well. We continue see good number in auto sales, especially in rural areas, and in terms of aspirations of moving to luxury cars,” said Nitin Deshmukh, CEO of Kotak Private Equity.
Although Deshmukh did not disclose the size of the investment, VCCircle learnt that the transaction was done in two tranches where Kotak Private Equity had initially picked up stake in 2011 for Rs 80 crore, followed by a second tranche of Rs 45 crore ago.
Kotak PE currently manages three funds – two growth capital and one life sciences fund. Last year, the firm exited facilities management company BVG India and also saw its portfolio company Muthoot Finance complete an IPO.
Another recent investment by Kotak PE includes Hyderabad-based Natco Pharma where its life sciences-focused venture fund has acquired stake in partnership with Sun Pharmaceutical promoter Dilip S. Shanghvi.
According to Deshmukh, valuations in the auto component space have been under control, which makes Minda Corporation an attractive opportunity. Private equity deals in the auto component space steadily fell between 2006 and 2009 in terms of volume and value, before picking up in 2010, according to VCCEdge, the financial research arm of VCCircle.
The 2011 jump in value was accounted for by two deals – Navis Capital buying out Classic Stripes for $100 million, followed by Actis picking up Standard Chartered Private Equity’s stake in Endurance for $71 million through a secondary deal.
Investment In Minda Corp
The Minda Group had a formal split in 1996 when the brothers, Nirmal (NK Minda) and Ashok, formed separate companies. The flagship of the NK Minda group is Minda Industries, which is listed on the Bombay Stock Exchange and backed by Motilal Oswal Private Equity.
Both groups have recently re-branded themselves, with Ashok Minda becoming Spark Minda and NK Minda becoming Uno Minda.
Spark Minda is one of the leading manufacturers of automotive components for the OEMs (original equipment manufacturers), serving two-wheeler and four-wheeler vehicle manufacturers in India, Europe, CIS and ASEAN countries. It has 19 plants across the country, as well as nine overseas plants located in Germany, Poland, the Czech Republic, Indonesia, Vietnam & Uzbekistan and offices in the Netherlands and Japan.
The investment from Kotak comes at a time when the group is consolidating its businesses. It had already merged Minda SAI Ltd and Mayank Auto Engineers Pvt Ltd with Minda Corporation last fiscal.
The Spark Minda Group had also taken the inorganic route to add to its portfolio of products and expand into other geographies. Since 2007, it had closed three acquisitions and could be looking at more. In 2007, the group acquired German auto component company Kunststofftechnik Sachsen GmbH & Co KG (KTSN) for about €42.6 million or over Rs 250 crore. KTSN makes plastic injection-moulded interior parts and specialty products such as glove boxes, cup-holders and ashtrays.
Spark Minda bought another German firm Schenk which makes specialist interior plastic components for Daimler, BMW, VW, Bosch, etc. The latest deal came in 2010 when it acquired Aksys, a manufacturer of composite moulds and suppliers to Daimler, VW, Renault and General Motors.