Private equity funds including Blackstone, EQT and ChrysCapital are evaluating precision engineering and manufacturing businesses with the aim of consolidating such businesses. According to reports from Mint, India's family-owned precision engineering and manufacturing businesses are increasingly seeking to institutionalize operations and sign up private equity or strategic partners to scale up to the next level of growth. The trend has been driven by succession challenges and the need for diversification away from China to secure supply chains for global companies.
CTC Group, started by Ramesh Kumar Agarwalla and Gokul Kumar Agarwalla in 1983, has mandated Avendus Capital as an adviser to sell a minority stake and raise about $50 million to fund its growth plans. As reported by Mint, Hical Technologies Pvt Ltd, based in Bengaluru and founded by Shashikiran Mullur in 1988, is looking to raise a similar amount for a minority stake sale. Balaji Precision Components Pvt Ltd and Coimbatore-based Rabwin Industries Pvt Ltd are in talks for majority stake sales, with both businesses seeking a valuation of ₹2,500 crore-3,000 crore and having roped in EY as an adviser.
The trend began with deals in precision engineering and metal processing within the automotive components sector, where several Indian companies have built deep capabilities and established global market leadership. According to Ashish Gulati, partner and head of corporate finance at KPMG India, global bulge-bracket investors like Blackstone, Bain Capital, Carlyle, Warburg Pincus have taken the lead in consolidating multiple such businesses to form 'platforms'. Sona Comstar, the then Blackstone-owned platform, went for an IPO in 2021 while several others are lining up to do IPOs in the next 12 months.
Non-automotive precision engineering businesses catering to oil and gas, power equipment, aerospace and defence, data centres and general engineering are now increasingly gaining investor attention and emerging as the next big opportunity in the space. As reported by Mint, Koushik Bhattacharyya, managing director and head of industrials investment banking at Avendus Capital, noted that it has a high entry barrier as qualification with customers could take many years. Companies such as Azad Engineering Ltd, Unimech Aerospace and Manufacturing Ltd and Data Patterns (India) Ltd have set benchmarks in terms of valuations, with multiple PE-led platforms likely to be created in the next 12 to 24 months.
