The private equity fund, ChrysCapital, has increased its equity exposure in the Amtek group, which has a major presence in the auto component industry. The PE fund has bought 7% in Amtek Auto, 4% additional stake in Amtek India and fresh equity of 7.6% in Ahmednagar Forgings.
Confirming the fund’s acquisitions, Amtek group CFO S Singhi said, “ChrysCapital has been buying stake in our group companies from the long-term point of view, with a time horizon of about 2-3 years. The fund appears to be bullish on the auto sector.”
The PE fund’s investments have come at a time when the auto and auto ancillary sectors are passing through a rough patch following the rising interest rates and a slowdown in demand.
ChrysCapital has spent Rs 32 crore to increase its holding in Amtek India from 5.8% to 9.8% and infused Rs 23 crore into Ahmednagar Forgings.
From its peak of Rs 207 on December 17, 2007, the shares of Amtek India slipped 66% to close at Rs 70.9 on Friday. Ahmednagar Forgings shed 67% to Rs 89 during the same period.
The Amtek Group is in the process of merging the operations of its group companies, Amtek India, Ahmednagar Forgings, Amtek Ring Gears, Amtek Crankshaft, Amtek Castings India with Amtek Auto.
After the merger, ChrysCapital will hold about 8-9% stake in the merged entity, according to Singhi.
Amtek Auto has dropped plans to acquire the Frankfurt-based KSM Castings due to differences over valuations. Amtek Auto reportedly offered 15% less than the asking price of 220 mn euros. Two PE funds also withdrew from the race.
Consequently, KSM Castings has put its sales plans on the backburner. The proposed acquisition was part of Amtek's strategy to consolidate its European business. Amtek enjoys around 40% of the castings market share in Western Europe.
KSM Castings is a leading manufacturer of security and complex, light metal castings for the global automotive industry. Amtek has been on an acquisition spree. The group first acquired the US-based ring gears manufacturer Midwest Manufacturing in 2002, followed by the UK-based GWK and Lloyds Brierly Hill.
It recently bought Triplex Ketlon, a gear company in the UK. In the domestic market, Amtek acquired the Pune-based Akiel Castings and Amforge's conrod division in Delhi.
Source: Economic Times