Warburg Pincus abandons Tata Technologies investment
Warburg Pincus has called off a planned $360 million investment in Tata Technologies, the engineering outsourcing and product development IT services arm of Indian conglomerate Tata Group.
Tata Motors said in a statement that both parties agreed to cancel the deal due to delays in securing regulatory approvals, along with Tata Technologies’ unsatisfactory performance as a result of market challenges. The company said it remains positive on the outlook of the business and is continuing to explore strategic options to exit.
The investment would have seen Warburg Pincus take a 43% stake in Tata Technologies comprising a 30% stake held by Tata Motors and the entire 13% stake held by Tata Capital’s growth fund. Warburg Pincus had planned to leverage its industry connections to help Tata Technologies grow its business opportunities outside the Tata Group.
Tata Technologies' services cover engineering, research and development, product lifecycle management, and IT. It works with manufacturers in the automotive, aerospace and industrial machinery sectors, with more than 8,500 employees across 23 countries. The division reported revenue of INR28 billion ($435 million) for the year ended March 2017, up from INR27 billion the year before. Over the same period, net profit dropped from INR3.8 billion to INR3.5 billion.
Warburg Pincus is currently deploying its latest global fund, which closed in 2015 at the hard cap of $12 billion. The vehicle invests in the energy, financial services, healthcare, consumer, industrial and technology, media and telecom sectors. A separate fund focused on financial services closed last year with $2.3 billion and will invest alongside the main fund.
Last year the firm said it expects to deploy at least $8 billion in India over the next 10 years as the quality of entrepreneurs and talent available in the country continues to improve. Recent investments in India include a INR2.1 billion commitment to financial services provider Computer Age Management Services and a $350 million investment in satellite TV provider Bharti Telemedia.
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