Mape Advisory in talks with PE funds to sell stake in Agile Electric
Th deal, worth nearly $40 million, is likely to be closed in the next two to three month
Mumbai: Bengaluru-based boutique investment bank Mape Advisory Group Pvt. Ltd has initiated negotiations with private equity (PE) funds including Tata Capital Growth Fund to sell its stake in Agile Electric Sub Assembly Pvt. Ltd for nearly $40 million (around ₹ 250 crore), according to three people familiar with the development.
On 22 January, Japan-based Igarashi Electric Works Ltd and Mape Advisory had agreed to buy a total of 97.9% in Agile Electric from global PE fund Blackstone Group Lp for $106.4 million. In July 2013, Blackstone had acquired Agile for $110 million.
“They (Mape) have initiated negotiations with PE funds and the discussions are progressing well. They are looking to sell the entire stake that they picked up as part of the deal. Mostly the deal would be closed in next two-three months’ time," said the first person cited above.
Mint could not ascertain the exact amount of stake held by Mape Advisory in Agile Electric.
“The investment bank had entered the deal because the Japanese partner wanted to buy back the company and they wanted to close the deal soon," the second person added.
An email sent to Mape Advisory on Thursday evening went unanswered. Tata Capital Growth Fund in an emailed response said they will not be able to comment on the story as the spokesperson is unavailable.
Post the acquisition of nearly 98% stake in Agile Electric, Igarashi Electric Works and Mape Advisory had to make an open offer for 26% shares in Igarashi Motors India Ltd (IMIL). The open offer was triggered as Agile Electric owns 41.92% in IMIL.
During the open offer, Igarashi Electric Works and Mape Advisory had offered shareholders ₹ 307.92 per share aggregating to ₹ 245.12 crore, taking the total deal size to ₹ 901.71 crore. According to a notification to BSE, Igarashi Electric was identified as the acquirer and Mape Advisory as the person acting in concert with the acquirer.
This was the first time that Mape, an investment banking firm co-founded by former DSP Merrill Lynch bankers Jacob Mathew and Ramprasad M. focusing on advising mergers and acquisitions and PE transactions, ended up acquiring a minority stake in a company.
Mape is now looking to offload what it picked up in Agile and IMIL as part of the deal.
“Transactions in the auto component space are happening, but valuations are not as close to what they were six months back. Even secondary sale by private equity funds are not taking place at fancy valuations," said Anil Singhvi, founder and chairman at Ican Investment Advisors. Singhvi added that deals will close in the secondaries space and a pickup in outbound deals will gain strength if European economic conditions continue to deteriorate. In PE parlance, secondaries are transactions where an existing PE fund sells its stake to another peer.
IMIL is engaged in the production and sale of permanent magnet DC motors and its accessories, mainly for the automotive sector. DC motor is a mechanically-commutated electric motor powered from direct current. IMIL came into existence way back in 1993, when Igarashi Electric formed a joint venture with Crompton Greaves Ltd to form CG Igarashi Motors Ltd. Over the last two decades, both firms had exited IMIL.
According to the notification on BSE, post the recent deal, Igarashi Electric, Agile and Mape Advisory are listed as promoters of the company.
On Tuesday, shares of Igarashi Motors ended at ₹ 379.80 each on BSE, down 0.42%, while the Sensex shed 0.11% to close at 28,161.72 points. For the December 2014 quarter, it recorded net profit of ₹ 12.79 crore while revenue stood at ₹ 101.83 crore, whereas during the December 2013 quarter, it reported net profit of ₹ 12.57 crore while revenue was ₹ 92.70 crore.
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