Mumbai: Tata Motors Ltd and Warburg Pincus Llc have mutually agreed to call off the US private equity firm’s proposed investment of around $360 million in Tata Technologies Ltd, Tata Motors said in a stock exchange filing on Monday.
“Due to delays in securing regulatory approvals as well as due to the recent performance of the company not meeting internal thresholds because of market challenges, the parties to the transaction have mutually decided not to proceed with the closure of the transaction," Tata Motors said in its statement to the stock exchange.
Tata Motors will continue to explore strategic options to sell its stake in Tata Technologies and remains positive in its outlook, the statement added.
In June, Tata Motors and two other group entities had announced the sale of a 43% stake in engineering unit Tata Technologies to an affiliate of Warburg Pincus. Warburg was to acquire 30% from Tata Motors and its unit Sheba Properties Ltd, and another 13% from Tata Capital Ltd. Tata Motors owns 70.4% of the Singapore-based firm, according to its annual report.
The proposed stake sale to Warburg was the first big divestment announced by Tata Motors since N. Chandrasekaran took over in February as chairman of Tata Sons Ltd, and some of its group firms, including Tata Motors.
The transaction was aimed at helping Tata Motors pare debt. Its consolidated debt (including that at UK subsidiary Jaguar Land Rover Automotive Plc) stood at Rs79,323.36 crore at the end of fiscal 2016-17.
Tata Technologies provides design, research and development services to the automotive, aerospace and industrial machinery industries.
The proposed investment in Tata Technologies was one of the major investments announced by Warburg Pincus in 2017.
In 2017, Warburg made several investments in Indian companies such as a $350 billion investment in Airtel DTH and $120 million investment in multiplex firm PVR Ltd.
Tata Motors shares closed at Rs396.05, up 3.12% on BSE; while the benchmark Sensex closed at 34,757.16 points, down by 0.88%. The announcement was made after the market closed on Monday.