Carlyle likely to invest $400 million in India's auto component sector: Report

Carlyle is targeting mid-sized companies that specialise in precision machining and forging components for EVs, with plans for integration through a series of roll-up mergers.

Global private equity firm Carlyle is planning to set up a $400-million platform in India aimed at acquiring and merging auto component manufacturers, Mint has reported.

The firm intends to acquire at least two part-makers by the end of the current financial year and an another two over the next 12 to 18 months, focusing on companies that support electric vehicles (EVs) and those with strong export capabilities, the report cited sources as saying.

Carlyle is targeting mid-sized companies which specialise in precision machining and forging components for EVs, with plans for integration through a series of roll-up mergers.

The firm is also looking to make smaller investments in manufacturers of commercial vehicle components. The goal is to secure controlling stakes in these investments.

Moneycontrol couldn’t verify the report independently.

Despite not identifying suitable larger companies, Carlyle is opting to acquire smaller businesses for future integration, the report said.

Recently, Carlyle acquired Worldpac, a leading automotive aftermarket parts supplier in North America, for $1.5 billion.

The firm sees a significant opportunity in India's growing domestic market and its potential as an export hub in the auto component sector. This aligns with Carlyle's broader investment strategy, which it aims to replicate in other markets, it said.

Carlyle has reportedly received $165 million in dividends from Hexaware Technologies, an IT services firm it acquired for $3 billion in 2021. The acquisition was primarily financed through approximately $1 billion in offshore debt, a common strategy for private equity firms that use cash flows from acquired companies to service debt and provide returns to investors.

Carlyle is also competing with Premji Invest and Japan's Mizuho to acquire a controlling stake in KKR-owned Avendus Capital. SpiceJet disclosed a settlement agreement with Carlyle Aviation, which involves a write-off of $40.17 million in lease arrears and the conversion of outstanding dues into equity in the airline.