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Rico to divest stake in auto component JV with Japanese partner FCC for $81M

Auto component manufacturer Rico Auto Industries Ltd has obtained its board approval to exit its joint venture FCC RICO Ltd by selling 50 per cent equity stake to the Japanese partner FCC Co Ltd for Rs 495 crore (over $81 million), as per a stock market disclosure.

The stake sale is, however, subject to completion of customary conditions precedent and such other regulatory conditions as may be required to be compiled with as applicable.

FCC RICO, established in 1997, is 50:50 joint venture and is exclusively into manufacturing and supplying of automobile clutch assemblies to OEMs (original equipment manufacturers) of two wheelers and four wheelers.

Its major clients include Honda group companies besides auto firms as Suzuki, Yamaha, TVS, Piaggio and Bajaj.

Rico Auto and its subsidiaries supply high-precision, fully machined aluminum and ferrous components and assemblies to automotive OEMs in India. The company caters to two-wheeler, passenger car and commercial vehicle segments, and also to system suppliers.

Recently, Arvind Kapur-led promoter group of Rico Auto pledged additional 7.4 per cent of their holding with KKR India Financial Services Pvt Ltd, a non-banking finance arm of private equity giant KKR, pushing up its total pledged stake with KKR India Financial to 22.17 per cent.

KKR, a leading global investment firm that manages investments across multiple asset classes including private equity, has been actively backing Indian business houses through debt as well as equity funding.

On Thursday, shares of the company closed at Rs 35.30 each, up 4.9 per cent from their previous close on the BSE in weak Mumbai market.

Law firm Khaitan & Co. advised FCC Japan on this transaction.

PwC was the financial advisor to Japanese firm FCC Co Ltd on the transaction, while Axis Capital was the financial advisor to Rico Auto. Khaitan & Co acted as the legal advisor to FCC Co.

(Edited by Joby Puthuparampil Johnson)

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