Piramal Enterprises and Bain Capital Credit-promoted India Resurgence Fund (IndiaRF) on Tuesday announced investment of up to Rs 615 crore (USD 83 million) in Gujarat-based auto components major Setco Group.
The transaction will be carried out in a two-step process with Setco Automotive Ltd (Setco) transferring its clutch business into its subsidiary Setco Auto Systems Pvt Ltd (SASPL).
Subsequently, IndiaRF along with its affiliates will invest through a senior debt facility and 35 per cent equity stake in SASPL, IndiaRF said in a statement. IndiaRF is an India-focused distressed investment platform.
"The investment proceeds will be used for growth capital and providing working capital to enable the businesses of (SASPL) to grow on the back of anticipated recovery in the commercial vehicles market, meet the demand in the replacement market and re-finance/repay debt facilities," it added.
Commenting on the investment in Setco, IndiaRF Managing Director Shantanu Nalavadi said, "Our partnership will drive a two-fold strategy to restructure the balance sheet of the company as we also work closely with the promoters and management team, to drive rapid revenue growth and sustainable improvement in profitability."
IndiaRF continues to remain focused on providing long-term strategic solutions that enable an effective turnaround to profitability for high quality companies, Nalavadi added.
Setco Automotive Chairman & Managing Director Harish Sheth said IndiaRF's investment will bring in significant strategic operational improvement in both SASPL and Lava Cast, an integrated foundry and machined casting firm.
"We are delighted to partner with IndiaRF at this critical juncture in Setco Automotive's journey. We look forward to leveraging their proven global expertise in restructuring and turnarounds, and are certain that our combined efforts will help accelerate our ambitious growth trajectory towards improved performance and profitability benefiting all its stakeholders," he added.
Setco Group is focused on manufacturing and marketing of clutches for commercial vehicles for original equipment manufacturers (OEMs), including catering to the aftermarket for OEM brands and the independent aftermarket.
It is also backward integrated, manufacturing castings through wholly-owned subsidiary, Lava Cast Pvt Ltd.