American private equity giant Blackstone is preparing to launch an initial public offering (IPO) for an auto parts firm it controls, the second potential big-ticket listing of an enterprise from its India portfolio in 2021.
Gurugram-based global auto component maker Sona Comstar, which is backed by Blackstone and Sunjay Kapur-led Sona Group, has launched preliminary talks with bankers and is looking to raise Rs 3,500 crore to Rs 4,000 crore by listing on the exchanges, people familiar with the matter told Moneycontrol.
The size of the issue has not been finalised yet and may change at a later stage, they said.
“Sona Comstar has shortlisted investment banks Kotak Mahindra Capital, JM Financial , Credit Suisse, Nomura and JP Morgan as advisors and may file the DRHP ( draft red herring prospectus) with SEBI by February,” said one of the persons cited above.
Nomura is also part of Blackstone’s advisors for the Aadhar Housing Finance IPO, which was first reported by Moneycontrol on November 3, 2020.
“Blackstone will make a partial exit via the IPO. The listing is aimed at scaling up Sona Comstar, bringing in more stakeholders and making it a bigger, stronger platform,” added a second person.
The firm aims to become one of the top four Indian auto component companies by FY24, according to its website.
Blackstone is the world’s largest alternative asset manager and the biggest owner of commercial real estate in India. It has also kickstarted preliminary discussions for an IPO by its housing finance portfolio company Aadhar Housing Finance. Moneycontrol was the first to report the story on November 3, 2020.
In August 2019, Blackstone announced the merger of Chennai-based auto component firm Comstar, which it controlled, with Sona BLW to create Sona Comstar. Blackstone would hold a 65 percent stake in the firm and Sanjay Kapur would hold 35 percent, according to the announcement.
“The auto market is at the bottom of the cycle. Investors are largely underweight and can build positions in new issuances,” said a third individual familiar with Sona Comstar’s IPO plans. A fourth individual also confirmed the IPO roadmap of the firm.
All the four individuals spoke to Moneycontrol on the condition of anonymity. In response to an email query, Blackstone and Credit Suisse declined to comment. Moneycontrol is awaiting an email response from Sona Comstar, Kotak Mahindra Capital, and JM Financial, and the story will be updated will their responses.
On December 10, 2020, Coimbatore-headquartered auto component maker Craftsman Automation filed its DRHP with SEBI to launch a Rs 750-crore IPO.
The Sona Comstar footprint
Sunjay Kapur is the Chairman of Sona Comstar, which has 9 plants spread across India, China, Mexico, and the US. The export-driven firm had revenues of Rs 1,600 crore in FY19 and has set a revenue target of $1 billion by 2024. According to reports, it supplies to auto majors such as Ford Motors, Daimler, Tata Motors, and Ashok Leyland.
According to its website, it’s one of the world’s largest manufacturers of precision forged gears for differentials with a global market share of 6 percent as well as the producer of the world’s lightest starter motor. In the domestic market, the firm is a leading player in the commercial vehicle space for bevel gear supplies.
In addition to differential gears, the company produces BSG ( Belt Driven Starter Generator) solutions for hybrid cars, traction motors for EV applications, starter motors, alternators, transmission gears, axle stubs and differential assemblies for electric and combustion engine vehicles.
According to Automobile Component Manufacturers Association, auto component exports from India are expected to reach $80 billion by 2026.
Blackstone's IPO report card
The last domestic IPO from the Blackstone portfolio through the traditional route happened more than five years back when fragrance maker SH Kelkar launched a Rs 500-crore offer in October 2015.
When it comes to REIT ( real estate investment trust ) listings, in April, 2019, India saw its first REIT IPO when Embassy Office Parks , backed by Blackstone and Embassy Group hit the domestic bourses. Later, in August 2020 , the second REIT IPO, namely Mindspace Business Parks , backed by Blackstone and K Raheja Corp, made its market debut.
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