Domestic strategic buyers, including Bharat ForgeBSE 2.67 % and Sona KoyoBSE 1.99 % Systems, are competing with bulge-bracket private equity funds such as Blackstone Group, KKR and DA Capital to acquire all or part of Amtek Group’s businesses in what could add up to $1billion in deals. Lenders to the debt-laden group are looking to auction the units off to get their money back.
The stake sales could slash the promoters’ holdings by more than half with buyers taking on most of the debt. Amtek is one of 12 accounts recently identified by the Reserve Bank of India for insolvency proceedings. ET first reported on May 10 that a lenders’ consortium led by State Bank of India and IDBI Bank had decided to auction stakes in Amtek Auto, Metalyst Forgings, Castex Technologies and Amtek Ring Gears.
The lenders want to bring in equity capital and settle 25% of the total debt of around Rs 20,000 crore through this process. Following this, 25% of the debt will be retired once the group regains operational stability. The remaining 50% of Amtek’s dues is to be repaid through a long-term arrangement involving a mix of low-coupon debt and equity, sources have said.
Blackstone, KKR, and DA Capital have submitted expressions of interest (EoIs) to participate in the upcoming sale. Strategic investors such as Bharat Forge and Sona are also in the fray, multiple sources with knowledge of the matter said. “Bharat Forge and Sona are looking to acquire parts of the profit making auto forging assets, while financial investors are looking to acquire the entire basket,” said one person close to the bidding process.
“We may be able to close a series of deals in 11-12 weeks,” said a source close to Amtek Group. “Most EoIs have submitted similar plans to take over the assets (although) their valuation matrices and broad numbers vary a bit. Amtek Auto may see significant bidding interest as it holds several overseas businesses.” Amtek Group, KKR and Blackstone declined to comment. There was no response to emails sent to DA Capital, Bharat Forge and Sona Koyo.
Apart from India operations, Amtek’s units have a strong presence in Europe, the Americas and Japan. The group’s auto ancillary business – forging, casting, machining – is spread across 80 global plants. Amtek Auto is an integrated auto component manufacturer.
