KKR to buy controlling stake in Alliance Tire

US buyout firm KKR & Co L.P. has agreed to buy a controlling stake in India's Alliance Tire Group from Warburg Pincus, the three companies said on Friday, without disclosing details of the transaction.

The deal will be the biggest private equity transaction in India after Bain Capital paid about $1 billion to buy a 30 per cent stake in business process and technology services provider Genpact in August 2012.

Yogesh Mahansaria, founder of ATG, will continue to maintain an ownership stake in the company.

Reuters earlier reported that KKR would pay around $500 million (Rs 2,723 crore) for the stake from Warburg, which invested in Alliance in 2007.

"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," KKR India head Sanjay Nayar said.

Warburg Pincus India managing director and co-head Vishal Mahadevia said : "We are confident that ATG's success will continue with its new partners." Warburg Pincus was associated with Alliance Tire for the past six years.

The US private equity firm will put in slightly over $300 million of its own money to buy an over 75 per cent stake in Alliance, a source familiar with the matter told Reuters on Friday.

Alliance Tire will be the last new investment from KKR's debut Asia fund, a $4 billion fund raised in 2007. The firm is near to a final close on a new $6 billion Asia fund, the largest ever buyouts fund raised for the region.

KKR's capital markets team put together the financing package for the deal, the source said, which included financing from Crescent Mezzanine and Ivy High Income Fund.

Alliance owns two manufacturing plants, one each in Israel and India, and has a sales presence in more than 120 countries, according to its website. Alliance's tyres are also made at contract manufacturing facilities in China and Taiwan.

The group had sales of more than $500 million in 2012.

Warburg Pincus, which invested over $3 billion in India, will be exiting its 6-year-old investment in the company.

Credit Suisse advised Alliance on the deal while Nine Rivers Capital advised the founders. Barclays Capital and JPMorgan advised KKR.

The transaction is subject to customary closing conditions, including the receipt of regulatory and third-party
consent.