Warburg Pincus Exits Apollo Tyres, Offloads Stake for Rs 1,073 Crore

In a significant move within the Indian tyre industry, Warburg Pincus, a global private equity firm, has divested its entire stake in Apollo Tyres, a leading tyre manufacturer based in Gurugram. The transaction, which took place on Wednesday, involved the sale of a 3.54 per cent shareholding for a substantial sum of Rs 1,073 crore through open market operations on the Bombay Stock Exchange (BSE).

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The shares were sold by Warburg Pincus's entity, White Iris Investment Ltd, across 14 block deals. According to BSE data, the total number of shares offloaded amounted to 2,24,74,903, with each share priced at an average of Rs 477.35. This strategic sale attracted a diverse group of buyers including several domestic mutual funds and foreign investors. Notable among these were Edelweiss Mutual Fund, Mirae Asset Mutual Fund, ICICI Prudential Mutual Fund, Sundaram Mutual Fund, ICICI Prudential Life Insurance Company, Societe Generale, Ghisallo Master Fund LP, Goldman Sachs Investments Mauritius I, Morgan Stanley Asia Singapore, and Citigroup Global Markets Mauritius.

Prior to this transaction, White Iris Investment Ltd held a 3.54 per cent stake in Apollo Tyres as of March 2024. The company's shares saw a positive uptick of 1.78 per cent to close at Rs 490.75 each on the BSE following the announcement of the deal.

This divestiture comes in the wake of Apollo Tyres' recent financial performance report for the March 2024 quarter. The company witnessed a 14 per cent decline in its consolidated net profit which stood at Rs 354 crore, down from Rs 410 crore in the corresponding quarter of the previous fiscal year. This decrease was attributed to elevated expenses despite a slight increase in revenue from operations which was reported at Rs 6,258 crore compared with Rs 6,247 crore in the fourth quarter of 2022-23.

Interestingly, this is not Warburg Pincus's first divestment in Apollo Tyres. In December of the previous year, the private equity firm had sold a 4.5 per cent stake in the company for Rs 1,281 crore through multiple block deals. This pattern of strategic investment and divestment highlights the dynamic nature of equity investments in the automotive and tyre manufacturing sector.

The recent transaction underscores the active participation of institutional investors in India's equity markets and reflects their confidence in the growth prospects of companies like Apollo Tyres. It also illustrates the fluidity of capital markets and the strategic maneuvers by global investment firms like Warburg Pincus to optimize their investment portfolios.