Gurugram based Apollo Tyres said on Wednesday that global private equity firm Warburg Pincus will invest $150 million in the company. The board of Apollo Tyres had accepted the issuance of involuntary convertible preference shares worth Rs 10,800 million (about $150 million) to an affiliate of Warburg Pincus.
The investment describes a primary capital infusion into the company and is subject to shareholder and regulatory approvals.
“Warburg Pincus investments are a strong vote of confidence in our business, management team & growth prospects. I believe the company will boon from the backing of a large financial investor of their pedigree and our partnership will further strengthen Apollo Tyres’ board and governance,” said Onkar S Kanwar, chairman of Apollo Tyres.
“In Apollo Tyres we see a fascinating growth story and believe that the company is well-positioned to build upon the strong leadership position it has carved out within the industry. The company is excited to partner with the management team of Apollo Tyres in this journey and looks forward to assisting them during the next phase of the company’s growth,” said Vishal Mahadevia, the managing director of Warburg Pincus India.
Apollo Tyres turned down to give details of how the funds will be used. Shares of Apollo Tyres closed 3.59% lower on the BSE at Rs 148.85 on Wednesday.
Apollo Tyres will use the proceeds from the issuance of these shares for the repayment of high-cost borrowings. The brokerage company said that the negative impact of the equity dilution will be mostly outset by the reduction in interest cost, thus impacting the earnings per share forecasts for FY21 by only about 2%.