India Resurgence Fund (“IndiaRF”), promoted by Piramal Enterprises Limited and Bain Capital Credit, along with its affiliates today announced an investment of upto INR 615 crore (USD 83 million) in Gujarat based Setco Group. As part of the transaction, Setco Automotive Limited (“Setco”) will transfer its clutch business into a subsidiary, Setco Auto Systems Private Limited (“SASPL”), into which IndiaRF will invest through a senior debt facility and 35% equity stake in SASPL.
The investment proceeds will be used for growth capital and providing working capital to enable the businesses 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.
Commenting on the investment, Shantanu Nalavadi, Managing Director, IndiaRF said, “We are pleased to partner with Setco Automotive, as it embarks on an exciting journey to enhance its market leadership. Our partnership will drive a twofold 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.”
Harish Sheth, Chairman & Managing Director, Setco Automotive said, “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. IndiaRF’s investment will bring in significant strategic operational improvement in both SASPL and Lava Cast.”
Setco Group is a progressive, technology driven automotive component company focused on manufacturing and marketing of clutches for commercial vehicles for original equipment manufacturers (“OEMs”) including catering to aftermarket for OEM brands and the independent aftermarket.
SASPL commands the largest share of Medium and Heavy Commercial Vehicles clutch business in India. SASPL has recently diversified into the tractor market and has started supplies to some of the tractor OEMs with few more in the pipeline. Setco Group is also backward integrated, manufacturing castings through state of the art plant housed in a wholly owned subsidiary, Lava Cast Private Limited (“Lava Cast”).
Wadia Ghandy and Co. were the exclusive advisors to Setco Group on this transaction.