Standard Chartered PE (SCPE), which has evinced interest in buying out the 75 per cent stake in Alliance held by existing investors, including Warburg Pincus, is likely to rope in its investors for bidding for the acquisition. The stake held by Warburg and other investors is valued at around $400 million (Rs 2,140 crore).
It is learnt PE firms such as Carlyle, Bain Capital, KKR, Advent International and Temasek have also shown interest in the stake.
If the deal materialises at the current valuation, this could be the second largest PE deal in the unlisted space in India after the $425-million investment by PE funds in Asian Genco.
According to sources, SCPE, which typically invests in the $20-100 million range, is likely to rope in global investors (limited partners) to bid for the Alliance stake.
SCPE has made several large investments, including $45 million in INOX India, $37 million in Ocean Sparkle, $35 million in Prime Focus, $32 million in Varun Beverages, $23 million in Karaikal Port and $16 million in Craftsman Automation during the last six months. It has invested about $500 million in the last two years in India.
SCPE officials refused to comment for the article. Mails sent to Ashok Mahansaria, founder and promoter of Alliance, and Niten Malhan, managing director of Warburg Pincus India, did not elicit any response till press time. Warburg holds about 72 per cent in Alliance.
Alliance Tire, founded in Israel in 1950, was acquired by the Mahansaria family, with the backing of Warburg, in 2007.
With active presence in over 120 countries in six continents, the group aims a global turnover of $600 million, says the company website. In 2009, Alliance had acquired US-based bankrupt company GPX International Tire Corp, including worldwide rights to the Galaxy and Primex brands.
With three major brands—Alliance, Galaxy and Primex—the company caters to the area of off-road applications. Alliance is a leading brand in the tractor radial tire segment, while the company offers tires for forestry machines and compact construction equipment.
The company owns two manufacturing plants, one in Hadera in Israel and the other in Tirunelveli, Tamil Nadu. Apart from its own plants, Alliance’s tires are also manufactured at contract manufacturing facilities in China and Taiwan.
Alliance has plans to invest $160 million in capacity expansion. The company has proposed to set up an off-highway tyre production unit in Gujarat, while expanding the production capacity of its existing plant in Tamil Nadu is also on the cards.