Tata Motors restarts talks to sell Tata Technologies Ltd unit stake

Warburg Pincus agreed last year to buy a 43% stake in Tata Technologies for about $360 million

Tata Motors Ltd, the owner of Jaguar Land Rover, has restarted talks on the sale of a stake in its engineering unit just months after a deal with Warburg Pincus was called off, people with knowledge of the matter said.

The carmaker has started preliminary discussions with a private equity firm that expressed interest in buying a stake in Singapore-headquartered Tata Technologies Ltd, according to the people, who asked not to be identified because the information is private. Tata Motors plans to use proceeds from the sale on capital expenditures for its domestic automotive business, one of the people said.

Warburg Pincus agreed last year to buy a 43 per cent stake in Tata Technologies for about $360 million. It was planning to buy about 30 per cent of the business from Tata Motors, as well as the entire 13 per cent holding owned by Tata Capital Ltd., according to a statement at the time. In February, Tata Motors and Warburg Pincus agreed to call off the transaction.

The deal was scrapped due to delays securing regulatory approvals and a decline in Tata Technologies’s business performance, the Indian company said in a statement at the time. Any sale would help Tata Motors reduce its debt which has risen to Rs 889.7 billion ($12.9 billion) at the end of March, from Rs 786.3 billion a year earlier, according to data compiled by Bloomberg.

Tata Motors is planning further divestments after selling a stake in Tata Technologies, one of the people said. It has classified its investment in Tata Hitachi Construction Machinery Co. as held for sale, according to its latest annual report. The carmaker also has holdings in fellow group companies Tata Steel Ltd. and Tata Chemicals Ltd.

A representative for Tata Motors said the company has nothing new to share. A spokeswoman for Tata Technologies didn’t immediately respond to emailed queries.

Tata Technologies provides outsourced design, research and development services to the automotive, aerospace and industrial machinery industries. Tata Motors owns 72.3 per cent of the company, the carmaker’s annual report shows.