New Delhi, Aug. 4 -- Private equity firm Bain Capital will pocket a bigger cheque than previously planned by partially exiting an Indian company that joined its portfolio just last year and walk away with spectacular returns in the process.
The PE firm, which concluded fundraising in May for its new Asia vehicle after collecting $10.5 billion, will pare its stake in Dhoot Transmission Ltd through the wiring harness maker's upcoming initial public offering.
Aurangabad, Maharashtra-headquartered Dhoot Transmission's IPO will raise Rs 3,000 crore (approximately $314.7 million). The IPO comprises a fresh issue of Rs 1,400 crore and an offer for sale of 19.14 million shares.
US-based Bain will sell up to 16.02 million shares while Mangalam Capital Pvt Ltd, earlier known as Mangalam Coils Pvt Ltd, will offload up to 3.12 million shares.
The PE firm has increased its offer for sale from the roughly 13 million shares proposed in the draft prospectus due to increased demand from anchor investors, people aware of the matter said. The company has roped in a couple of large global and domestic investors as its anchors, the people said, without disclosing their names.
Dhoot Transmission confidentially filed for the IPO in February and submitted an updated draft prospectus in May.
The IPO opens on August 10 and ends two days later. The price band for the issue has been fixed at Rs 829 to Rs 871 per share. At the upper end of the band, Dhoot Transmission will command a post-IPO valuation of Rs 17,815.53 crore (about $1.87 billion), back-of-the-envelope calculations show.
Bain will pull out up to Rs 1,408 crore in the partial exit. That's about a third of its total investment.
According to VCCircle estimates, the PE firm is likely to churn out an internal rate of return of around 56% and a multiple on invested capital of 1.8x in rupee terms. Its IRR in dollar terms would be around 44%, as the near-10% depreciation in the rupee against the greenback since Bain's investment eroded its returns.
This means Bain is exceeding the minimum 20% IRR that private equity firms typically chase in rupee terms and 15% in dollar terms by a wide margin.
The PE firm had pumped Rs 3,956.2 crore (about $462 million at the prevailing forex rates) into the company in April last year through a primary infusion of capital and a secondary purchase of shares from Dhoot's founders. It then infused Rs 1,022.6 crore ($107 million) in March this year. This takes Bain's total investment into the automotive component manufacturer to Rs 4,979 crore. The PE firm currently owns a 55% stake in the company.
Dhoot's valuation has nearly doubled, from around Rs 8,000 crore, since Bain first acquired a stake in early 2025, said a person aware of the development, adding that the PE firm has almost doubled its money.
"Since Bain came in, the business has grown and margins have doubled. A couple of large M&As that the company was able to do with Bain's help gave them global reach," said the person.
In February, Dhoot announced the acquisition of FourFront Ltd, a manufacturer of customised components for large equipment makers, for Rs 400 crore. Dhoot had said then it would merge FourFront with its automotive electronics arm. In April, a subsidiary, Dhoot Automotive Systems Pvt Ltd, agreed to acquire auto-electrical and electronic components maker Multilink for Rs 435 crore, according to the red herring prospectus.
Bain's activities
The PE firm's India portfolio includes wealth manager 360 ONE WAM Ltd, gold-loan financier Manappuram Finance Ltd and chemicals maker Novopor.
The partial exit from Dhoot Transmission is Bain's second liquidity move from its India portfolio this year. Last month, it sold its entire remaining stake in Pune-based drugmaker Emcure Pharmaceuticals Ltd via a secondary market deal, pocketing 352.4 crore ($37.3 million) from the exit.
Bain had been selling its stake in Emcure for the past couple of years. Its overall annualised returns from the drugmaker missed the exit benchmark, VCCircle reported previously. In July last year, however, the PE firm scored blockbuster returns by selling part of its stake in 360 One WAM.
Dhoot Transmission's business
The company was founded over 20 years ago by Rahul Dhoot. It is a key supplier to original equipment manufacturers across the automotive and consumer durables sectors. It manufactures wiring harnesses, automotive switches, electronic sensors and controllers, connectors and terminals, automotive cables, power cords and battery packs.
Around 77% of the company's revenue comes from wire harnesses, while the rest comes from other businesses such as electronics, batteries, sensors, controllers and switches.
These products cater to the manufacturing of two-wheelers, three-wheelers, cars and commercial vehicles, off-road vehicles, earth movers, agricultural equipment, medical equipment and domestic appliances. Its key clients include Bajaj Auto, TVS Motor Company, Honda Motorcycle & Scooter India, and Royal Enfield.
In FY26, Dhoot Transmission posted revenue from operations of Rs 4,524.9 crore, a 31% jump from the previous year. EBITDA margins were 15.71% in FY26 compared with 17.15% a year ago.
Published by HT Digital Content Services with permission from VC Circle.