The Hindu Business Line : HM board approves stake sale to Actis in components biz

HINDUSTAN Motors Ltd, a CK Birla group company, on Saturday approved the proposal to hive off its component business, comprising the Hosur and Pithampur units, into its subsidiary A VTEC Ltd, and invited Actis Capital LLP, through its investment vehicle Actis Powertrain Investments Ltd, to acquire 30 per cent stake in the new company.

The promoter group of the company has agreed to acquire 21-per cent stake in A VTEC at the same valuation as Actis. According to sources, Actis has invested about Rs 78 crore for the transaction.

The enterprise valuation of A VTEC works out to Rs 423 crore, with Hindustan Motors, Actis and the promoter group holding 49 per cent, 30 per cent and 21 per cent, respectively, in it.

"The transaction involves the simultaneous implementation of two stages. First, being the transfer of the component business from Hindustan Motors (HM) to A VTEC and second being the sale of A VTEC shares to Actis and GP-CK Birla group. The consummation of the two stages is expected to result in cash flow to HM amounting to Rs 265 crore. Additionally, Actis and the promoter group would invest Rs 30 crore into A VTEC," according to a Hindustan Motors statement.

"We see huge potential for the auto component business both in the domestic and export markets. We are delighted to partner with the GP-CK Birla Group in A VTEC," Mr Donald Peck, Managing Partner, Actis India, said while commenting on the transaction.

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