Global private equity firm Carlyle is set to invest $400 million in India’s auto component market, focusing on the growing domestic demand and potential for export. The firm aims to establish a platform to acquire and merge mid-sized manufacturers specializing in precision machining and components for electric vehicles (EVs).
According to reports, Carlyle plans to acquire at least two part-makers by the end of the current financial year and another two within the next 12 to 18 months. The strategy will emphasize companies that support EV production and those with strong export capabilities, utilizing a series of roll-up mergers for integration.
In addition to its primary focus, Carlyle is also considering smaller investments in manufacturers of commercial vehicle components, aiming for controlling stakes in these ventures. The firm has opted for smaller acquisitions due to challenges in finding suitable larger companies.
Recently, Carlyle acquired Worldpac, a leading automotive aftermarket parts supplier in North America, for $1.5 billion. The firm sees significant growth potential in India’s auto component sector, which aligns with its broader investment strategy that it intends to replicate in other markets.
Additionally, Carlyle has received $165 million in dividends from Hexaware Technologies, an IT services firm it acquired for $3 billion in 2021. This acquisition was largely financed through approximately $1 billion in offshore debt, a typical approach for private equity firms that leverage cash flows from acquired companies to service debt and deliver returns to investors.
Carlyle is also competing with Premji Invest and Japan’s Mizuho for a controlling stake in KKR-owned Avendus Capital. Furthermore, SpiceJet has announced a settlement agreement with Carlyle Aviation, which includes a write-off of $40.17 million in lease arrears and the conversion of outstanding dues into equity in the airline.
