The India Resurgence Fund (“IndiaRF”), which is co-founded by Piramal Enterprises Limited and Bain Capital Credit, and its affiliates, made a Rs 615 crore investment in Gujarat-based Setco Group.
Setco Automotive Limited (“Setco”) will transfer its clutch business to a subsidiary, Setco Auto Systems Private Limited (“SASPL”), into which IndiaRF would invest through a senior loan facility and a 35 percent equity investment in SASPL as part of the deal. The investment proceeds will be utilized to provide growth capital and working capital to enable firms to expand on the basis of expected commercial vehicle market recovery, satisfy replacement market demand, and refinance or repay debt facilities.
Commenting on the investment, Shantanu Nalavadi, Managing Director, IndiaRF said, “We are pleased to partner with Setco Automotive, as it embarks on an exciting journey to enhance its market leadership. Our partnership will drive a twofold strategy to restructure the balance sheet of the company as we also work closely with the promoters and management team, to drive rapid revenue growth and sustainable improvement in profitability. IndiaRF remains focused on providing long-term strategic solutions that enable an effective turnaround to profitability for high-quality companies.”
Harish Sheth, Chairman, and Managing Director, Setco Automotive said, “We are delighted to partner with IndiaRF at this critical juncture in Setco Automotive’s journey. We look forward to leveraging their proven global expertise in restructuring and turnarounds and are certain that our combined efforts will help accelerate our ambitious growth trajectory towards improved performance and profitability benefiting all its stakeholders. IndiaRF’s investment will bring in significant strategic operational improvement in both SASPL and Lava Cast.”
Setco Group is a forward-thinking, technology-driven automotive component manufacturer specializing in clutches for commercial vehicles for original equipment manufacturers (“OEMs”), as well as aftermarket for OEM brands and the independent aftermarket.
SASPL controls the majority of the clutch business in India for Medium and Heavy Commercial Vehicles. SASPL has just expanded into the tractor industry and has begun supplying a few tractors OEMs, with a few more on the way. Setco Group is also backward integrated, with a state-of-the-art casting facility situated in a wholly-owned subsidiary, Lava Cast Private Limited (“Lava Cast”).