Darby backs Chinese alternator manufacturer

Darby Overseas Investments has provided a $33.5 million senior secured convertible loan to PECH Holdings, the holding vehicle of Prestolite Electric Beijing (PEBL), which manufactures alternators and starter motors. Other details of the transaction were not disclosed.

The investment was made from Darby Asia Mezzanine Fund II, a $254 million fund that closed in October 2007.

“PEBL is well-positioned to take advantage of strong prospects in the China medium- and heavy-duty vehicle industry,” David Hudson, senior managing director for Asia and Global Infrastructure at Darby, said in a statement.

PEBL provides medium- and heavy-duty alternators and starter motors to equipment manufacturers in China. The company is the largest supplier of alternators to the Chinese bus and truck markets, Darby said in a statement. It also provides customers with component parts such as regulators, armatures, rotors and shafts.

Alternators are motors that convert mechanical energy to electrical energy and starter motors are devices that allow engines to power themselves.

PEBL is a joint venture controlled by Prestolite Electric, a Michigan-based manufacturer of alternators and starter motors for the vehicle, military and industrial markets. The company has operations globally and is owned primarily by First Atlantic Capital, a New York-based private equity firm, Darby said.

Darby Asia Mezzanine Fund II makes investments across Asia and has a focus on China, India and South Korea. This is the firm’s tenth investment. A few of the fund’s prior investments include Bhoruka Power Corporation, a company engaged in the construction of wind power and small hydroelectric projects in India; Top Image, a bicycle manufacturing company in China; Leadcorp, a Korean consumer finance company; Petrus Holding, which manufactures industrial components in China; Escorts Construction Equipment, a manufacturer of heavy construction and material handling equipment in India and Amalgamated Bean Coffee Trading Company, an Indian coffee conglomerate.

Investors in Darby Asia Mezzanine Fund II include China Investment and Finance, Mizuho Corporate Bank, Franklin Templeton Investments, Asian Development Bank, Dutch development Bank FMO, German development bank KfW and AXA Private Equity.

Darby has more than 90 investments across Asia, Central and Eastern Europe, and Latin America.