Target Information

Carlyle has acquired a controlling stake in two prominent Indian auto component manufacturers: Highway Industries and Roop Automotives. This strategic acquisition enhances Carlyle’s footprint in India’s advanced manufacturing sector, focusing on suppliers of forged and precision-machined components for electric, hybrid, and internal combustion engine vehicles.

The newly formed entity operates a total of 12 manufacturing facilities and 14 international warehouses. It offers over 1,500 products to 55 customers across 17 countries, establishing a significant presence in the global automotive supply chain. The founders of both companies will retain ownership stakes, with Mohit Oswal from Roop Automotives designated as the non-executive chairperson. Joining the board will be Carlyle’s Mark Blaufuss and former Bharat Forge executive Kishore Saletore.

Industry Overview in India

India's automotive components industry is a pivotal segment of the country's manufacturing landscape, contributing to significant economic growth. The sector has seen a remarkable transformation, driven by advancements in technology and a shift towards electric and hybrid vehicles in response to global demand for cleaner energy solutions. Major automotive manufacturers are increasingly relying on local suppliers to meet both quality and sustainability standards.

The Indian government has implemented a range of initiatives, including the Make in India campaign and production-linked incentives, to enhance domestic manufacturing capabilities. Furthermore, the push towards electric mobility is expected to elevate the demand for high-quality auto components, thereby creating opportunities for both established and new players in the industry.

As of 2023, the Indian automotive components market is projected to continue expanding, benefiting from a robust supply chain and growing international collaborations. The landscape is characterized by increasing foreign direct investment, skill development, and proximity to technological advancements which are essential for fulfilling the evolving requirements of the global automotive sector.

This growth outlook makes India an attractive destination for investment, particularly for companies focused on innovation and sustainable manufacturing solutions. With a youthful workforce and abundant resources, the country is well-positioned to become a significant manufacturing hub on the global stage.

Rationale Behind the Deal

The acquisition signifies Carlyle’s confidence in India's potential as a leading advanced manufacturing hub. Amit Jain, managing director and head of Carlyle India Advisors, highlighted the plan to scale operations and create value for customers through synergies arising from the merger. By combining the strengths of Highway Industries and Roop Automotives, the deal is expected to enhance operational efficiencies and expand the market share of the combined entity.

This strategic move aligns with Carlyle’s broader strategy to deepen its investments in India’s industrial sector, particularly in advanced manufacturing where it has already invested more than $1.1 billion. The acquisition reflects a long-term vision to capitalize on emerging opportunities in one of the world's fastest-growing economies.

Information about the Investor

Carlyle is a global investment firm with a diverse portfolio across multiple sectors, including technology, healthcare, aerospace, and manufacturing. With over 30 years of experience, it has established a strong presence in Asia, particularly in India, where it has made significant investments to promote industrial growth.

Carlyle's investment philosophy focuses on driving operational improvements and strategic expansions within its portfolio companies. The firm's dedicated team in India has a deep understanding of the local market dynamics and regulatory environment, making it well-equipped to guide the growth of Highway Industries and Roop Automotives in the evolving automotive landscape.

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This acquisition can be viewed as a strategic and potentially lucrative investment for Carlyle, given the strong growth trajectory anticipated in the Indian automotive component sector. The merger of Highway Industries and Roop Automotives creates a formidable entity poised to leverage synergies for operational efficiency and increased market reach.

Moreover, the collaboration between experienced leaders from both companies, alongside Carlyle’s management expertise, can enhance innovation and responsiveness to changing market demands. This is particularly crucial as the industry transitions towards electric vehicles, where technology-driven solutions will be pivotal.

While the financial terms of the deal have not been publicly disclosed, Carlyle's prior investments in the Asian manufacturing sector, amounting to $32 billion globally, reinforce its commitment to fostering long-term growth in this high-potential industry.

Finally, with strong backing from a reputable investor like Carlyle, Highway Industries and Roop Automotives are well-positioned to capitalize on emerging trends and challenges in the automotive market, ultimately delivering value to stakeholders and positioning themselves successfully for future expansions.

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