 "Kinetic sells Mahindra two wheeler stake for Rs 180 cr")
Kinetic Engineering, the component making company of the Pune-based Firodia family, has sold its entire stake of 10.3 per cent in Mahindra Two Wheelers for Rs 182 crore to private equity investment group Samena Capital.
Mahindra Two Wheelers is the two-wheeler making company making entry level motorcycles and scooter from bought out assets of Kinetic Motors since 2008. The loss making company is in the process of getting merged into utility and tractor making company Mahindra & Mahindra.
Kinetic will receive a consideration of about Rs 182.1 crore and after certain committed non convertible debentures repayments and cost of financing, the net proceeds would amount to about Rs 109.8 crore.
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At the time of sale of its two-wheeler business Kinetic had held 20 per cent stake in Mahindra Two Wheelers (MTWL) owing 2.95 crore shares. After a few rounds of right issue by the promoters of MTWL which was subscribed by Kinetic its stake dropped to 10.36 per cent but with a shareholding of 11 crore shares.
Kinetic Motor Company was merged with Kinetic Engineering in 2012, as a result the stake had been transferred to the latter.
Sulajja Firodia Motwani, Vice Chairperson, Kinetic Engineering said, "We were in discussion with Mahindra & Mahindra for the last 9-10 months. We requested them to allow us for an exit as we expressed our desire to focus on our core business. There was a seven year lock-in period in MTWL but having completed five years our request was accepted by M&M".
Besides meeting various obligations including meeting of working capital and foreign currency convertible bonds and debt repayment, Kinetic Engineering will be investing in development of new electric three wheelers which will be launched later in the year.
"We would be investing the proceeds from the stake sale in green technology. In partnership with the Council of Scientific and Industrial Research (CSIR) we will be coming out with a electric three-wheeler later this year" added Motwani.
The electric three wheelers will be developed at the research and development unit in Pune and be later manufactured at Ahmednagar. Kinetic Engineering has been developing battery operated recreational vehicles like golf carts and campus-based people movers.
The non compete clause with M&M, which does not allow Kinetic to reenter the two-wheeler space has expired. However, Kinetic, which was once a popular scooter maker with partnership with Honda, does not intend to enter that space again, clarified Motwani.
Anoop Mathur, President, Two Wheeler Sector, Mahindra & Mahindra, said, “We are happy with our association with the Kinetic Group which enabled us to enter the two wheeler business some years ago. We welcome our new partner Samena Capital at a time when our business is growing strongly driven by rising demand for the Centuro motorcycle which has been developed based on keen consumer insights.”
Established in 2008, Samena Capital is a principal investment group focused on Asia and the Middle East. Ambit acted as the sole financial advisor to KEL for this transaction.