The Mahindra Group, one of India's largest business conglomerates, has transferred as many as seven of its existing businesses under its newly-incorporated private equity arm Mahindra Partners.
These assets, with a combined turnover of $500 million, are widely considered non-strategic to its core automotive business and are spread across logistics, retail, trading, engineering & chemicals.
Last year, the Mahindra Group had announced formation of the PE unit which, it said, will help launch new businesses for the group. But, five among the seven assets, transferred to the PE unit, have been with Mahindras for sometime suggesting that a monetising play is possibly in the offing, says one private equity observer, who did not wish to be quoted.
Unlike other corporates entering into the PE business, Mahindra Partners would mostly dabble in group businesses, where it could chart a value unlocking move or an exit route for the non-core existing assets. This also indicates that Mahindra's corpus for the PE play is mostly the assets that have been transferred to the entity.
The unit would also navigate Mahindra's interests in new domains outside auto in future, as reported in the past.
The businesses which have come under Mahindra Partners include Mahindra Intertrade, which trades in steel and steel related services. This business also includes units like Mahindra Steel Service Centre and Mahindra MiddleEast Electrical Steel Service Centre, according to Mahindra Group website details.
Other businesses are Mahindra Logistics, a logistics services company which was spun off as a subsidiary from Mahindra and Mahindra Ltd (M&M) in October 2008; Mahindra Retail, which operates stores catering to mother-and-child category; Mahindra Ocean Blue Marine, a JV with Ocean Blue Boating, in the leisure boating space and Mahindra Engineering & Chemical Products, which supplies material handling equipment and systems.
Emails sent to Mahindra Group and Mahindra Partners on the recent asset realignments did not elicit any response.
The group has also appointed Parag Shah, a Harvard Business School grad who has been with the Mahindra's for 10 years, as the unit's managing partner. Besides new businesses, Mahindra Partners also 'advises on exit strategies for companies within the Group.'
Though it is not known if the group will raise external funds for Mahindra Partners, it has been partnering with PE funds for new ventures in the recent past. Mahindra Retail brought ICICI Ventures, one of the largest PE firms in India, as a partner with 26% stake. The retail unit runs specialty stores for mother and children’s products under the brand name 'Mom and Me.' This unit, which was one of its recent new ventures, has been made a part of Mahindra Partners.
Among its recent forays, the group has ventured into the aerospace field by buying two Australian firms Gippsland Aeronautics Pty Ltd and Aerostaff Australia Pty Ltd. The acquisition was done by Mahindra Aerospace Pvt Ltd (MAPL), in which Kotak Private Equity has invested Rs 150 crore.