Tata Opportunities Fund (TOF), the flagship private equity fund of Tata Capital, is investing Rs 300 crore ($50 million) in Varroc Engineering Private Limited, the holding company of the Varroc Group. Tata Capital also has a few other PE funds following different investment strategies.
With revenues of over Rs 6,900 crore ($1.15 billion), Varroc is a leading Indian auto component manufacturer with a large global presence. The group’s domestic businesses are geared towards the two-wheeler segment with a strong presence in plastics and polymers, metallic parts and electrical components.
Over half of the group’s revenue is derived overseas where it is among the leaders in automotive lighting systems for passenger vehicles. Varroc had acquired the global automotive lighting business of Visteon (formerly a division of Ford) in 2012.
Apart from 21 manufacturing plants in all major auto hubs across India, Varroc has a global manufacturing footprint in low-cost countries spanning Mexico, China and the Czech Republic. The group has marquee clients including Jaguar Land Rover, Ford, Tesla, GM, Volkswagen, Bentley and Nissan in the global market and players such as Bajaj, Honda, Yamaha, Hero, Royal Enfield, Mahindra and Tata Motors in the domestic market.
Varroc Group is led by Tarang Jain, a first generation entrepreneur, supported by professional management teams in India, North America, Europe and China.
With this investment, Tata Opportunities Fund has struck its first manufacturing company investment and its first deal outside of the Tata group.
The fund’s prior investments were into Tata group’s budget hotel chain Ginger Hotels and DTH firm Tata Sky.
Tarang Jain, founder and MD of Varroc, said, “The Tata Opportunities Fund and its team of investment and operating professionals, not only bolster us financially, but also provide us a strategic springboard which enables us to leapfrog into the next cycle of our growth.”
Padmanabh Sinha, managing partner of the PE fund’s advisory team in India, said, “The fund believes India has excellent engineering and management capabilities which can be leveraged to create global leaders in manufacturing. While retaining a Tata bias in its investment strategy, the fund is actively pursuing investments into other such companies that have a history of operational excellence and robust governance led by dynamic management teams.”
Prakash Telang, former CEO and managing director of Tata Motors, and also a senior advisor to Tata Capital Private Equity, who has been closely involved with the transaction, commented, “The integration of Visteon Lighting into Varroc has been seamless and has parallels with some of the more successful Tata acquisitions overseas. Clearly, India needs many more such stories.”
Tata Opportunities Fund is a third party sector and stage agnostic private equity fund which invests in select Tata group entities as well as other independent Indian businesses. It completed the final close of its latest fund last year with commitments of $600 million from a select list of marquee global investors. It can invest through a mix of growth capital and buy-out strategies with typical deals in the range of $30-200 million.
(Edited by Joby Puthuparampil Johnson)