Motilal Oswal PE to invest $27 mn in Happy Forgings
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Motilal Oswal Private Equity is investing Rs 200 crore ($27 million) in Ludhiana, Punjab-based auto components maker Happy Forgings Ltd.

The PE arm of Motilal Oswal Financial Services Ltd said in a statement it will make the investment from its third fund, India Business Excellence Fund-III.

The announcement comes four months after VCCircle first reported that the PE firm was in advanced talks to back the auto components maker in its biggest investment so far.

“Manufacturing has been one of the focus areas of our fund as it is expected to benefit from strong underlying growth in the Indian economy as well as significant export opportunities,” said Vishal Tulsyan, managing director and CEO at Motilal Oswal PE.

Paritosh Garg and Ashish Garg, promoters of Happy Forgings, said in the statement that the company will use the funds for greenfield expansion and addition of forging presses.

Motilal Oswal Investment Banking acted as the financial adviser to Happy Forgings for this transaction.

Happy Forgings was established in 1979 by Paritosh Garg. The company produces forged and machined transmission and engine components for the automotive sector. Its product range also includes steering knuckles, transmission gears and suspension assemblies.

The company's net sales rose to Rs 431.58 crore for the year through March 2017 from Rs 374.69 crore the previous year. Its profit after tax jumped to Rs 34.24 crore from Rs 16.9 crore.

Motilal Oswal PE

The PE firm provides growth capital to mid-market companies, typically in the range of Rs 100-300 crore, across sectors.

It had raised $115 million in a growth capital fund in 2007 and mopped up $155 million in its second fund in 2012. The first fund invested in 13 companies while the second struck 11 deals. It raised $325 million (Rs 2,300 crore) for its third fund this year. 

The third fund previously invested in Ahmedabad-based non-banking finance company MAS Financial Services Ltd and Mysuru-based N Ranga Rao & Sons Pvt. Ltd, which makes incense sticks under the Cycle Pure brand,  according to its website.

The PE firm has been steadily exiting several of its investments from its previous two funds.

It has so far exited Parag Milk Foods, Mrs Bector’s Food Specialties, Electromech, AU Financiers, Minda Industries, Power Mech Projects, Resurgere Mines & Minerals, InTarvo Technologies, Effort BPO, IMP Powers and Time Technoplast.

In November last year, Motilal Oswal PE logged out from its nearly decade-old investment in contract electronics manufacturer Dixon Technologies (India) Ltd, marking one of its most profitable exits.

Also read: Fund Scan: How Motilal Oswal PE made its mark in the mid-market space

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