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Warburg Pincus scraps deal to invest in Tata Technologies

05 February, 2018

Warburg Pincus and Tata Motors Ltd have called off a deal for the private equity firm to invest in Tata Technologies Ltd, the engineering outsourcing services arm of Tata Group.

Tata Motors said in a statement on Monday the transaction, announced in June last year, was scrapped due to delays in securing regulatory approvals and Tata Technologies not meeting internal performance thresholds because of market challenges.

“Tata Motors will continue to explore strategic options to sell its stake in Tata Technologies and remains positive on the outlook of the business,” the automaker said.

Warburg Pincus was to invest $360 million (Rs 2,300 crore) for a 43% stake in Tata Technologies. This would have been the PE firm’s single-largest investment in an Indian company.

The transaction involved the PE firm buying about 30% of Tata Technologies from Tata Motors and its unit Sheba Properties Ltd and the entire 13% stake held by Tata Capital Ltd. Tata Motors and affiliates of Tata Group were to retain an about 43% stake in Tata Technologies.

Tata Technologies has about 8,500 employees in 23 countries. Its services portfolio combines engineering, research and development; product lifecycle management and connected enterprise IT solutions.

The deal’s collapse comes at a time when Warbug has stepped on the gas in India. The PE firm has invested more than $1 billion in India over the past year-and-a-half, according to VCCEdge, the data research arm of VCCircle.

This includes $283 million in ICICI Lombard General Insurance, $77 million in Kalyan Jewellers India Ltd and about $120 million in multiplex chain PVR Ltd last year and $200 million in logistics companies Rivigo Services Pvt. Ltd and Stellar Value Chain Solutions Pvt. Ltd in 2016. It invested in Rivigo again last month.

The private equity firm has $44 billion in assets under management. It invests globally in businesses at all stages of development with a focus on five key sectors: energy, financial services, healthcare and consumer, industrial and business services, and technology, media and telecommunications.

Founded in 1966, Warburg Pincus has raised 16 private equity funds that have invested about $60 billion in almost 780 companies in nearly 40 countries. Warburg Pincus, which invests in India out of a global fund, had raised $12 billion in its latest flagship fund—Warburg Pincus Private Equity XII LP—in 2015.

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Warburg Pincus scraps deal to invest in Tata Technologies

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