Tata Capital, the financial services arm of Tata Sons, is learnt to be closing its first private equity deal. The company, formed in June 2007 to mark the group’s re-entry into financial services, is learnt to be in advanced stages of discussions with Solapur-based auto component manufacturer Precision Camshafts for buying a 32% stake for Rs 36 crore. This would value the company at nearly Rs 110 crore.
An e-mail sent to Tata Sons did not elicit a response as the official spokesperson was not available for comment.Sources in the industry said Tata Capital was looking to close the deal over the next few weeks, which would mark its foray into private equity. The company is also looking to close a few more transactions, which are also in the sub-$50 million range. Precision Camshafts is the largest manufacturer of camshafts in India. It supplies camshafts to automakers including Tata Motors, Maruti, GM, Hyundai and Ford.
Sources added that Tata Capital has ambitious plans for its private equity business, including making massive investments over the next few years. It is supposedly eyeing investments of Rs 1,000-5,000 crore over the next five years.
Tata Capital will enter areas such as capital market services, merchant banking, private equity, housing finance, asset and vehicle finance, other related areas. Other finance subsidiaries of the group, including Tata AIG Insurance, Tata Asset Management Company, Tata Investment Corporation and Tata Securities, are expected to continue as independent companies. Tata Investment Corporation along with Tata Sons is a promoter of Tata Mutual Fund, and Tata Asset Management is one of India’s oldest fund houses with a million-strong investor base.
Auto components is emerging as a very lucrative sector for investors. Delhi-based Amtek Auto recently raised funds worth $88 million through six FIIs. Experts say the sector will continue to witness many PE deals in the future, though they will be of a smaller size.
Source: Economic Times