Warburg eyes $350m stake in Tata co

Mumbai:

Warburg Pincus

is close to buying a minority stake in

Tata Technologies

for $300-350 million, which perhaps would be the American private equity firm’s first investment in a Tata entity.

Pincus has marched ahead in the deal, which had attracted other investors like

Temasek

Holding, to buy over 30% stake in the engineering services company. Warburg Pincus, which last month bought a stake in cinema operator

PVR

, is likely to become the second largest shareholder of Tata Technologies after Tata Motors.

TOIhad reported about Warburg Pincus and Temasek being the lead contenders for a slice of Tata Technologies in its October 14, 2016 edition.Tata Motors holds 72% in Tata Technologies and the proposed deal with Warburg will bring down its stake to 42%. Tata Motors wanted to retain its majority position in the car design company. The plan was to hold a 51% stake but it is now fine with holding 42%, said a person familiar with the transaction.

The other shareholders of Tata Technologies are the company’s senior management, Tata entities,

Tata Capital Growth Fund

, and Alpha TC Holding, a fund majorly sponsored by Japanese investment bank Mizuho Securities.

Tata Motors said that the company regularly reviews its non-core asset portfolio and sees how those could be monetised. “We do not have any additional comment to offer at this point of time”.

Tata Motors has been looking to sell a part of Tata Technologies to new investors for the last two years. Things appear to have gathered momentum in recent weeks and a deal, brokered by

Citigroup

, with Warburg is almost agreed upon. The latest development comes at a time when Tata Motors saw its profits decline by 96% to Rs 112 crore in the third quarter of fiscal 2017 due to losses in its domestic business and lower earnings at its British unit Jaguar Land Rover. Tata Technologies earns substantial revenues from Tata Motors and has been increasingly looking to expand its business beyond Tata Motors. Warburg has invested $3.8 billion in 50-plus companies in India.