Investment firm KKR to acquire 90% stake in Alliance Tire Group

"The equity value of the deal is $522 million, giving Warburg Pincus a super-normal return over the last seven year investment period," said a person familiar with the transaction.

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NEW DELHI: Global investment firm KKR today has entered into a definitive agreement to acquire a 90% stake in Alliance Tire Group, a global tire maker specialising in producing off-highway tires from Warburg Pincus and Yogesh Mahansaria, founder of ATG. Mahansaria and his management team will continue to own about 10% stake in the Company.

"The equity value of the deal is $522 million, giving Warburg Pincus a super-normal return over the last seven year investment period," said a person familiar with the transaction. Warburg had acquired ATG in 2007 for an equity value of $45 million and had invested significant amount in setting up manufacturing facilities in India, he said. The enterprise value of the deal is $650 million that include a debt of about $ 125 million. ET had reported on April 8 that KKR to acquire 90% stake in ATG and the deal is likely to be announced this week.

"This is the one of the successful exit for PE firm as Warburg Pincus earn more than four times in little over six years that too without listing the investee company, " said CEO of another PE firm and added "this is in contrary to the industry trend where large number investments of PE firms made during that period of pre- 2008 are stuck due to lower return."

"From funding the initial acquisition of Israel-based Alliance Tire Company to the development of a global player in the off-highway tire sector, our partnership with Yogesh and the entire ATG management team has been an extremely successful one," said Vishal Mahadevia, managing director and co-head of Warburg Pincus India.

"We would be delighted to have KKR as our new incoming partner. Our team is impressed by KKR's franchise and its strong track record. KKR's investment will enable us to continue to expand into new markets, make strategic acquisitions, and help scale our global presence" said Mahansaria.
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