“ATG is a leader in an attractive industry, with strong underlying growth drivers,” said Sanjay Nayar, Member of KKR and Head of KKR India. “We look to leveraging our global network to support their continued growth.”
According to sources, KKR will buy Warburg Pincus’ 80 per cent stake and the promoters’ 10 per cent stake. The promoters, the Mahansaria family, will hold the rest in ATG.
Alliance Tire was founded in Israel in 1950 and manufactures off-highway tyres and employs 2,500. The company caters to agricultural, forestry and construction industries. In 120 countries, it aims for a global turnover of $600 million, said the company site. ATG’s tyres are manufactured at units in Israel and India, with R&D units in Israel, India, the US and South Africa.
Alliance was bought by Yogesh Mahansaria (former CEO of Balkrishna Tyres) and his father, Ashok Mahansaria, with the backing of Warburg in 2007 for $150 million.
The deal with ATG is KKR’s second buyout in India, after Aricent. In 2006, KKR bought a majority stake in Aricent for $900 million, in the largest leveraged buyout in this country.
KKR’s investment in ATG would be made via KKR’s investment funds and supported by a financing tranche led by Crescent Mezzanine, with additional participation from Ivy High Income Fund, said the company.
Heramb Hajarnavis, Director, KKR India, said, “Following the buyout, we are exploring ATG’s expansion into markets across the US and Europe. Agriculture and construction are the growth-driving areas in the US and Europe.”
According to him, there was no immediate plan to diversify into the passenger vehicle segment.
In 2009, Alliance had acquired US-based bankrupt company GPX International Tire Corp, including worldwide rights to the Galaxy and Primex brands.
KKR, which has been active in India since 2006, has a portfolio that includes Aricent, Bharti Infratel, Coffee Day Resorts Pvt Ltd, Dalmia Cement (Bharat) Ltd, the JSW Group, Magma Fincorp Ltd, the Max India Group and TVS Logistics Services. Besides its investment in ATG, it has invested about $1.5 billion in India so far.
Largest PE deals in unlisted space
* $900-million buyout of Aricent by KKR
* $500-million KKR’s deal with Alliance Tire
* $425-million investment by PE funds in Asian Genco