Carlyle plans to produce $400 million worth of vehicles for auto parts in India

Global private equity firm Carlyle is building a $400 million platform in India to acquire and combine auto component makers, two people with knowledge of the plans said.

Carlyle could acquire at least two parts makers by the end of the current fiscal year and two more in the next 12 to 18 months, the people said, who asked not to be identified. They added that the company would focus on electric-vehicle companies and export-oriented businesses.

Focus on car parts

“The company wants to build a business focused on automotive components, especially precision machining and forging for electric vehicles,” said one of the two people mentioned above. “It will look to acquire mid-sized companies and integrate them,” he added. In addition to electric vehicles and exports, Carlyle will also make smaller investments in commercial vehicle component makers.

The PE firm will seek to secure a controlling stake in its investments, the people said. Carlyle did not respond to a request for comment Sunday.

Because Carlyle has failed to find suitable large businesses, it will buy smaller ones to integrate later in so-called bulk mergers, the people mentioned above said.

In August, Carlyle acquired Worldpac, a leading supplier of automotive aftermarket parts in North America, from Advance Auto Parts for $1.5 billion.

“It’s a thesis they strongly believe in and want to replicate in other markets. Apart from being a huge domestic consumer market, India can also grow as an export hub, especially in the auto components segment, so this seems like a lucrative opportunity,” the second person added.

Competitors’ success

Other PE firms have also had success investing in automotive components.

Carlyle India chief Amit Jain, in his previous role as managing director at Blackstone, led the investment in Sona Comstar, a company that makes automotive components for electric vehicle manufacturers. Blackstone created Sona Comstar through its 100 percent acquisition of Chennai-based Comstar for about ₹1,000 crore, which was later merged into Sona BLW. When Blackstone exited Sona Comstar, it had made almost 12 times its initial capital.

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Rival Bain Capital is also in the process of building an auto components platform. On Sept. 17, the PE firm said it was investing in RSB Transmissions, which makes systems and units for cars, construction and off-highway equipment. Bain said it would provide capital to pursue strategic mergers and acquisitions to build a diversified platform through RSB. “We are working closely with the Behera family (the founders of RSB) and are committed to building a larger, more diversified platform,” Rishi Mandawat, a partner at Bain Capital, said last week.

Second Indian Platform

This would be Carlyle Group’s second platform in India after setting up one in the generics segment following its partnership with Viyash Life Sciences in 2021. Through the platform, the company acquired Symed Labs, a niche API maker, to enable backward integration.

Carlyle is expected to invest from its new sixth buyout fund in Asia, for which it has received commitments of up to $3 billion so far, bringing the total it aims to raise to $8.5 billion. On Aug. 13, Bloomberg reported that the fund had raised a Japan-focused fund from investors to invest in high-growth opportunities.