Carlyle adds Roop Automotives and Highway Industries to its auto parts platform

Bengaluru/Mumbai: Global investment firm Carlyle on Thursday said it has built a diversified auto components platform under which it has consolidated Highway Industries and Roop Automotives Ltd. by acquiring a controlling stake in the two companies.

While Carlyle did not disclose the exact details of the transaction, a person familiar with the matter said the company had acquired a 67% stake each in Roop and Highway for a total consideration of $400 million.

Mint had reported in September about the investment firm’s plans to build a $400 million platform in India with a focus on companies catering to electric vehicles, as well as export-led companies.

“We believe India offers a tremendous opportunity to create world-class manufacturing enterprises, particularly in the auto components supply chain and other advanced spaces for both domestic and export markets," Amit Jain, managing director and head of Carlyle India Advisors, told Mint in an interview.

While the equity for the investment will come from funds affiliated with Carlyle Asia Partners (CAP), the founders of Highway and Roop are expected to continue holding significant stakes in the platform, the investment firm said in a statement.

Highway and Roop are among the leading players in manufacturing forged and precision-machined components, steering system assemblies, transmissions, and other powertrain applications for electric, hybrid, and internal combustion engine (ICE)- powered vehicles.

Through this platform, Carlyle will help them leverage operating synergies, create capabilities and capacities, to deliver more value for their customer base. “We believe creating scale with consolidation will enable investments in technology, talent and systems, which will allow the platform to deliver an enhanced value proposition for its customers," Jain said, adding that this provides a large opportunity for the platform.

Over the last three decades, the two companies have built a comprehensive product range of over 1,500 products, an extensive global clientele of 55 customers across 17 countries, and an expansive manufacturing footprint of 12 plants and 14 international warehouses, Carlyle said in a statement.

“I think we have been extremely focused and selective in picking up businesses of high quality. For context, Roop and Highway, which had a healthy double-digit growth over the last five years, will have ₹2,100 crores of revenue and close to ₹370 crore in Ebitda in the financial year ending March 2025," Jain said. 

For any hub to be created, having a base coming from domestic markets is always good, he added.

KPMG, Trilegal, Kotak and Deloitte acted as advisors to Carlyle for the transaction. Singhi Advisors and KPMG acted as the financial advisors to Highway and Roop shareholders, respectively.

Carlyle intends to deepen its investments in the auto components space and will seek to add more synergistic assets to the platform. “As we look through this space, one gap we may want to fill over time is Aluminum die casting," Jain said.

Carlyle’s buyout funds, including Carlyle Asia Partners, have deep experience investing in the advanced manufacturing or industrial sector, and has invested over $32 billion of equity in over 125 deals globally as of 31 December 2024, with about $1.1 billion of this in Asia.

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Looking for more space

“Our long-term endeavor is to put more capital behind the platform as we have learnt in a country like India, when you find the right parts to create a platform from the right industries, there is a lot of value in putting more money than less," Jain said, adding that there could be more such spaces where the industries are fragmented, and opportunities coming in are huge.

Other PE firms have seen success with auto components investments as well.

Carlyle’s Jain, in his previous role as a Blackstone managing director, had led investment in Sona Comstar, an auto component business supplying to electric vehicle manufacturers.

Blackstone had created Sona Comstar through the 100% acquisition of Chennai-based Comstar for about ₹1,000 crore, which was then merged with Sona BLW. When Blackstone exited Sona Comstar, it had made nearly 12 times multiple of its initial capital.

Rival Bain Capital is also in the process of creating an auto components platform. On 17 September, the PE firm said it was investing in RSB Transmissions, which makes automotive, construction, and off-highway equipment systems and aggregates. Bain said it would provide the capital to pursue strategic M&A opportunities towards building a diversified platform through RSB. “We are collaborating closely with the Behera family (the founders of RSB) and are committed to building a larger, more diversified platform," Rishi Mandawat, partner at Bain Capital, said last year.

Meanwhile, this would be Carlyle Group’s second platform in India after it set up one in the generic pharmaceuticals segment after partnering Viyash Life Sciences in 2021. Through the platform, it acquired Symed Labs, a manufacturer of niche APIs to enable backward integration.

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