Warburg Pincus to Pay $360 Million for Tata Tech Stake

(Bloomberg) -- Warburg Pincus agreed to buy a stake in Tata Technologies Ltd. from its parent Tata Motors Ltd., owner of Jaguar Land Rover, and another Tata group company for about $360 million.

The New York-based private equity firm will acquire 43 percent stake in the Singapore-headquartered engineering services company, Tata Motors said in a statement on Thursday. Warburg Pincus will purchase about 30 percent stake in the company from Tata Motors and another 13 percent held by Tata Capital.

The proceeds from the deal will likely help Tata Motors cut total debt that stood at 793.2 billion rupees ($12.3 billion) at the end of March as well as monetize non-core assets. Warburg Pincus will leverage its global network to help grow Tata Technologies, which provides outsourced design, research and development services to the automotive, aerospace and industrial machinery industries, both “organically and inorganically,” Vishal Mahadevia, managing director of the firm, said in the statement.

“As the engineering services outsourcing market has matured from cost arbitrage and staff augmentation to increasingly high-end, strategic work, Tata Technologies has been there leading the charge,” Chief Executive Officer Warren Harris said in the statement. “With the perspective and insights that Warburg Pincus offers as a premier global private equity firm, we are confident we will not only continue moving up the chain, but materially accelerate our growth journey.”

Tata Technologies’ profit fell 7.8 percent to 3.54 billion rupees in the year ended March 31. Revenue climbed 4.4 percent to 28 billion rupees. It got 40.2 percent of its revenue from the Asia-Pacific region, 35.4 percent from Europe and 24.3 percent from North America, according to a Tata Motors presentation last month.

Citigroup Inc. provided financial advise to Tata Motors and Tata Capital Investment Banking gave advise to Tata Capital.

After the transaction is completed, Tata Motors and affiliates of the Tata Group will hold about 43 percent stake in Tata Technologies, with the remaining ownership held by the management team and other shareholders.