The outsourced engineering and manufacturing services firm Quest Global has shortlisted three global private equity funds – Warburg Pincus, Kohlberg Kravis & Roberts (KKR) and Bain Capital – for raising anywhere between $50-75 million, at least two sources familiar with the development said.
The company tracking revenues of over $100 million has been in the market for almost a year to raise funds. The process seems to be gathering momentum now, with the short-listed funds commencing due diligence process, sources added. Quest Global, which has turned to aerospace design services in a big way, counts Boeing, Rolls Royce and EADS among its clients.
This is probably among the rare instances in India where the marquee names in the PE industry are pitched against each other in a relatively smaller fund raising process. “We are in the process of fund-raising and Merrill Lynch is leading the process,” said Aravind Melligeri, Chairman & Co-Founder of Quest Global, in an emailed response to VCCircle’s queries.
Founded by Aravind Melligeri and Ajit Prabhu twelve years ago, Quest had raised $6 million from Carlyle growth fund in 2003. The promoters bought back the stake four years later backed by a line of credit from ICICI Bank. The company mainly caters to customers in key verticals like aerospace, defence, power generation, oil & gas – where it helps them cut product development and project costs, shorten lead time and expand capacity, while maximising resources.
The Bangalore headquartered group consists of Quest Global Engineering, Quest Global Manufacturng and Quest Global SEZ. Quest has development centres in India, United States, Japan and Spain apart from having presence in the United Kinghdom, Italy and France.
Media reports in the past mentioned that Quest was looking to raise over $50 million to expand its engineering and manufacturing services. Nomura and ChrysCapital were among the private equity firms said to be talking to Quest for a capital infusion. The company is setting up a 300 acre special economic zone (SEZ) in Belgaum in North Karnataka, as global aerospace and defence firms outsource more work to Indian vendors.
Outsourcing firms catering to the aerospace industry are projected to gain from the offsets clauses, whereby the global giants who gain from India’s over $30 billion orders for aircrafts and helicopters are expected to employ local vendors for sourcing components and design work worth atleast one-third of the business generated in the country.
It is not clear whether Quest Global SEZ will be part of the ongoing fundraising process, as the promoters at one point had mulled a separate funding plan for the campus in Belgaum. Quest hopes to make it a hub for outsourced manufacturing and supply chain ecosystem for the global aerospace industry.