Gurugram-based Apollo Tyres on Wednesday said global private equity firm Warburg Pincus will invest $150 million in the company.
The board of Apollo Tyres has approved issuance of compulsorily convertible preference shares worth Rs 10,800 million (about $150 million) to an affiliate of Warburg Pincus.
The investment represents a primary capital infusion into the company and is subject to shareholder and regulatory approvals.
“Their investment is a strong vote of confidence in our business, management team and growth prospects,” said Apollo Tyres chairman Onkar S Kanwar. “I believe the company will benefit from the backing of a large financial investor of their pedigree and our partnership will further strengthen Apollo Tyres’ board and governance.”
Apollo Tyres declined to give details of how the funds will be used.
Vishal Mahadevia, managing director, Warburg Pincus India, said, “We see a compelling growth story in Apollo Tyres and believe the company is well-positioned to build upon the strong leadership position it has carved out within the industry. Warburg Pincus is excited to partner with the management team of Apollo Tyres in this journey and looks forward to supporting them during the next phase of the company’s growth.”
On Wednesday, shares of Apollo Tyres closed 3.59% lower on the BSE at Rs 148.85.
The proceeds from the issuance of these shares will be used by Apollo Tyres for the repayment of high-cost borrowings, according to a report by Emkay Global. The brokerage firm said that the negative impact of the equity dilution will be mostly offset by the reduction in interest cost, thus impacting the earnings per share forecasts for FY21 by only about 2%.
