KKR pays $500m for Warburg's Alliance Tire Group stake

Warburg Pincus took a 70% interest in Alliance in 2007 as part of a $150 million buyout with Yogesh Mahansaria, former CEO of India's Balkrishna Tyres. Mahansaria will retain partial ownership and work with KKR on developing the company.

The private equity firm is committing $300 million in equity from its first Asia fund, with Crescent Capital Group providing the remainder through a mezzanine financing tranche. Ivy Funds' Ivy High Income Fund, which typically invests through high-yield bonds and other securities, is also participating.

This is KKR's largest investment in India since it hired country head Sanjay Nayar to set up a local operation in 2008 but the makeup of the financing package - notably the presence of US-based players like Crescent and Ivy - reflects the global nature of Alliance's business. KKR's capital markets team is said to have played an important role in structuring the transaction.

"ATG is a leader in an attractive industry with strong underlying growth drivers. We are thrilled to be partnered with Yogesh and his management team and look forward to leveraging our global network to support their continued growth," said Nayar.

KKR and Warburg Pincus were said to have signed an exclusivity agreement in March. This came after a host of prospective investors, including Advent International, The Blackstone Group and Temasek Holdings, expressed an interest in the asset when a potential deal was announced in January.

Alliance has manufacturing plants in Israel and India, plus R&D facilities in Israel, India, the US and South Africa, employing more than 2,500 people worldwide. The company specializes in off-road tires, typically used in the agricultural, forestry and construction industries, selling its products in 120 countries under the Alliance, Galaxy and Primex brands.

The company was founded in Israel in 1950, filed for bankruptcy protection in the late 1980s and was acquired by a consortium including Bear Stearns in 1992, and went public in Tel Aviv the following year. The Warburg Pincus-Mahansaria buyout followed 14 years later. During the private equity firm's ownership period, Alliance's sales are said to have risen from $125 million to more than $500 million.

Credit Suisse served as the financial advisor to Alliance and Nine Rivers Capital advised the Mahansaria family. Barclays Bank and J.P. Morgan worked with KKR on the deal.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Buyouts
• South Asia
• Industrials
• Secondaries
• Exits
• manufacturing
• India
• buyout
• Secondaries
• KKR
• Warburg Pincus Asia
• Exit