Warburg to invest $360m for 43% stake in Tata Tech

Mumbai: Warburg Pincus will buy a 43% stake in Tata Technologies (Tata Tech) for $360 million, which will make the New York-based fund the single-largest shareholder of the automobile and aerospace designing firm. The private equity firm will buy a 30% stake from Tata Motors and a 13% stake from Tata Capital.
The transaction, expected to be completed by end of next month, will result in Tata Motors becoming a minority shareholder of the Pune-based company which it had set up 28 years ago.From 70%, the auto maker’s stake in Tata Tech will come down to 27%. Other Tata Group entities will hold 16% in the company while the balance 14% will be owned by group directors and the management, including CEO & MD Warren Harris.
Warburg Pincus, which has invested $4 billion in India, will have two board seats at Tata Tech. The fund’s proposed investment in Tata Tech follows its recent exit from a similar business profile firm called QuEST Global.
Tata Motors, under former chairman Cyrus Mistry, had initiated the process to partially divest stake in Tata Tech in 2015. Several well-known firms like Canada Pension Plan Investment Board, GIC of Singapore and Temasek had shown interest in the company. Tata Motors subsequently decided to exclusively engage with Warburg Pincus for the transaction. TOI had reported about Warburg Pincus’ impending deal in Tata Tech in its February 16 edition.
Though no cash comes into Tata Tech from the deal with Warburg Pincus, Harris said that the transaction will help the company to leverage on the fund’s prior experience in engineering services space as well as its global network of industry relationships to grow the business.
Tata Tech generated a profit of $53 million on a turnover of $423 million in fiscal 2017. Harris said that the company is looking to acquire firms specialising in connected technologies and other new-age technologies which will help it to double its turnover in the near future.