Tata Motors restarts talks to sell engineering unit stake

20 Jul 2018

Tata Motors, 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-headquarte Tata Technologies, 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% stake in Tata Technologies for about $360 million. It was planning to buy about 30% of the business from Tata Motors, as well as the entire 13% holding owned by Tata Capital, 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’ 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 nearly Rs 89,000 crore ($12.9 billion) at the end of March, from Rs 78,630 crore a year earlier, according to data compiled by Bloomber

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 as held for sale, according to its latest annual report. The carmaker also has holdings in fellow group companies Tata Steel and Tata Chemicals.

 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.