Warburg Pincus investing £117 million in Apollo Tyres

Private equity firm Warburg Pincus is investing around £117 million in Apollo Tyres via a subsidiary. On 26 February, the tyre maker’s Board of Directors approved the issue of up to 108 million compulsorily convertible preference shares, each with a face value of Rs 100, to Emerald Sage Investment Ltd. The transaction is subject to shareholder and regulatory approvals.

For Apollo Tyres, this proposed investment “represents a primary capital infusion into the company.” Commenting on the transaction, Onkar S Kanwar, chairman and managing director of Apollo Tyres Ltd said: “I am delighted to announce Warburg Pincus’ investment in Apollo Tyres. Their investment is a strong vote of confidence in our business, management team and growth prospects. I believe the company will benefit from the backing of a large financial investor of their pedigree and our partnership will further strengthen Apollo Tyres’ board and governance.”

Vishal Mahadevia, managing director and head, Warburg Pincus India, said: “We see a compelling growth story in Apollo Tyres and believe the company is well-positioned to build upon the strong leadership position it has carved out within the industry. Warburg Pincus is excited to partner with the management team of Apollo Tyres in this journey and looks forward to supporting them during the next phase of the company’s growth.”

Acquiring this shareholding will entitle Emerald Sage Investment to nominate a non-executive director to the Apollo Tyres Board of Directors and to the Board of two company subsidiaries, Apollo Vredestein B.V. and Apollo Tyres (Hungary) Kft.

The name Warburg Pincus is primarily known within the tyre industry for its past investment in Alliance Tire. The private equity firm acquired the off-highway tyre manufacturer for around US$150 million together with Yogesh Mahansaria in 2007, selling its controlling stake in the tyre maker to investment firm KKR six years later in a transaction believed to be worth $650 million.