Sona Group promoters raise structured loan from Avendus Capital to fund MSL stake purchase.
NEW DELHI: The promoters of auto components maker Sona Group have acquired the shares held by Mahindra & Mahindra in a joint venture company for Rs 120 crore. The Sona Group and M&M formed the JV nearly 20 years ago to manufacture clutches and propeller shafts for SUVs and light commercial vehicles.
The promoter family of Sona purchased the 37.5% stake held by M&M, its chairman and companies associated with it in MSL. Sona Group promoters will now own more than 70% of the company that supplies components to Ashok Leyland, Tata Motors, M&M, Eicher, JCB and US-based Meritor.
The transaction was funded by a loan from Avendus Finance. “We have provided an exit to investors as desired by them and will continue to expand our markets and build on the MSL brand which has benefited from the relationship with the Mahindra Group for many years,” said Gaurav Motwane, son-in-law of Sona Group founder, the late Surinder Kapur. M&M Chairman Anand Mahindra was an investor in MSL in personal capacity as well and has divested his holding as part of the deal. Also, IL&FS Financial Services sold its 5% stake in the company to an existing financial investor.
“We are increasingly seeing an appetite for differentiated forms of capital by good quality entrepreneurs and businesses,” said Sandeep Thapliyal, managing director of Avendus Finance, a NBFC floated by Avendus Capital.
The loan to the Sona Group’s promoters is partially structured to provide a fixed coupon rate to the lender and also has a component of payout linked to MSL’s financial performance. NBFC arms of private equity funds like KKR are active in financing acquisition of shares by promoters of companies as banks have limitations with respect to funding such deals.
KKR has in the past funded promoters of the Avantha Group and Max India through structured credit transactions that resulted in the fund acquiring stakes in companies owned by the promoters of the two.
