Automobile giant Mahindra and Mahindra said on Monday it will buy rest of Meru Travel Solutions Pvt Ltd for Rs 97.66 crore ($13.2 million), and named a new chief for the ridesharing platform.
Mahindra and Mahindra will acquire 44.14% stake from private equity investor True North and others for Rs 76.03 crore, and 12.66% from promoters Neeraj Gupta and Farhat Gupta for Rs 21.63 crore.
As of now, it has 43.20% of Meru.
The company said Neeraj Gupta, Meru’s founder, chief executive officer (CEO) and director, has stepped down and will continue as an employee until June 30.
Pravin Shah, former automotive president of Mahindra and Mahindra, will be CEO of Meru and its subsidiaries with effect from May 1.
Founded in 2006, Meru operates in the airport cab business and provides employee transportation services to corporates in India. True North had picked up a stake in 2007.
In September 2019, VCCircle reported True North was staring at a haircut on Meru as it gave up majority stake in one of its oldest remaining portfolio companies to Mahindra & Mahindra.
Mahindra & Mahindra’s projects with Ford Motor had halted in February, just weeks after the two companies called off their planned joint venture.
Indian automakers have been hit due to the ongoing second wave of coronavirus in India. Major automobile manufacturers Maruti Suzuki, Hyundai Motor, Tata Motors and Kia on Saturday reported a decline in passenger vehicle sales in April compared to March this year.
True North – earlier called India Value Fund Advisors -- was set up in 1999. It has been involved in the private equity business for over two decades. The firm focuses on mid-sized profitable businesses across sectors. It has so far launched six investment funds.
True North has invested in more than 50 Indian businesses. It started off with a $35 million fund in 2000. A $170 million fund followed in 2005 before True North more than doubled the corpus to $400 million for its third outing two years later.
The capital for the third fund was raised before the global financial crisis of 2007-08. Bulk of the money was returned through exits from broadband provider Atria Convergence Technologies, automotive components supplier Mahindra CIE, environmental services firm UEM India, hospital operator Aster DM Healthcare, Fincare Business Services (which was rolled over to the fourth fund) and Meru.
True North has been trying to exit the remaining investments from its third fund.
It sold a part of its holding in Policybazaar to five buyers last month: Ashoka India Equity Investment Trust, Triumph Global Holdings Pte Ltd, Serum Institute of India, IIFL Special Opportunities Fund Series 8, and India Acorn Fund.