Blackstone agrees to India buyout

The global private equity firm will take a 98% stake in auto parts maker Agile Electric in a rare control acquisition in India.

The Blackstone Group has entered into an agreement to acquire Indian auto parts maker Agile Electric Sub-Assembly and its listed subsidiary Igarashi Motors India for a combined deal value of $110 million, according to a filing from the target companies.

The Blackstone Group did not respond to requests for comment by press time.

The intended transaction will see Blackstone take a 97.9 percent stake in Agile, consequently giving the firm a 62.8 percent stake in Igarashi, the filing said. The firm has also made an open offer for a further 26 percent of Igarashi at $1.08 per share, representing a reported 8.4 percent premium over its last traded price before the announcement.

Agile is a Chennai-based manufacturer of automotive components and electric “rotating machines”, supplying companies such as Delphi, Bosch, Ford and Continental. The transaction marks Blackstone’s fourth buyout in the country, according to media reports. 

The deal also comes shortly after Partners Group secured a control investment in IT services business CSS Corp in May, buying an 80 percent stake for $275 million, Private Equity International reported earlier. 

[Firms] have to be more artful in the private equity space and look for dislocations in sectors and geographies.

Michael Chae, senior managing director, The Blackstone Group

Only a handful of buyout deals get completed in India. Both China and India have typically offered minority stakes only to private equity investors, which is at times problematic when it comes to making operational changes or exiting a business, as the entrepreneurs remain in control. 

At a recent industry conference, Blackstone senior managing director Michael Chae expressed the same. He said that Asia does not have the fundamentals of a traditional private equity market – offering control positions to firms that can leverage deals with cheap debt – and therefore firms “have to be more artful in the private equity space and look for dislocations in sectors and geographies”.

Other firms that have invested in India's automotive sector include Kohlberg Kravis Roberts and Warburg Pincus. In April, KKR acquired a controlling stake in tire-maker Alliance Tire Group from Warburg Pincus in a $500 million deal, PEI reported earlier. Warburg invested $100 million in the company in 2007 and was said to gain a 4x return from the sale, a source said earlier. 

The Blackstone Group is one of the largest private equity firms worldwide with about $230 billion in total group assets under management. The firm is currently investing from its sixth global fund, a $16.27 billion vehicle, according to PEI’s Research & Analytics division.