MUMBAI: US private equity giant Kohlber Kravis Roberts Co (KKR) is in preliminary talks to sell its 90% stake in specialty tire maker Alliance Tire.

The company is reportedly valued at $1.51 billion, which would be the largest PE exit deal at this level.

Japan’s Sumitomo Group, Germany’s Continental Tire, France’s Michelin Group and a number of private equity-led consortia are also involved in the review, three people with direct knowledge of the development said. Credit Suisse has been authorized to carry out the process, which is expected to progress in March.

UBS advised the German tire maker, while Sumitomo Bank appointed Barclays as advisor.

If successful, KKR (which acquired a 90% stake in Alliance in 2013) will exit with up to a 30% internal rate of return (IRR).

KKR declined to comment. Emails sent to Sumitomo, Continental Tire and Michelin had not received a response at the time of publication. Alliance Tire CEO Yogesh Mahansaria did not immediately respond to calls and texts.

For strategic investors, the deal provides access to niche off-highway or specialty tire businesses and emerging markets, for example:

Founded in 2000 by Alliance tire industry veterans Ashok Mahansaria and son Yogesh Mahansaria in 2006, Alliance is the world’s fifth-largest manufacturer of off-highway tires for the agriculture, forestry and construction industries.

Mahansarias Balakrishna is a leading manufacturer of specialty tires Industries 2006 Minority Shareholder and Director Year left this Indian company to form Alliance Tire Group Pincus with the support of Warburg Pincus.

Three years ago, KKR acquired a stake in Warburg in one of India’s largest private equity deals. Since the acquisition, KKR has invested in factories and expanded into new markets.

According to its website, Alliance operates in more than 120 countries and had annual global sales of more than $550.1 million in 2014. In addition to contract manufacturers in China and Taiwan, the company has plants in Tirunelveli, Tamil Nadu; Dahji, Gujarat; and Hadera, Israel. We have R&D centers in Israel, USA and India.

The tire industry is in a consolidation phase due to the weak macro environment and tariff wars. Last year, JK Tire acquired Kesoram Industries Haridwar tire plant, Apolloo plant and Tire has been considering global acquisitions. Trelleborg is a leader in engineered polymer solutions and a major player in specialty tires.111 monthly acquisition of CGS Holding in the Czech Republic.

Last year 11 HSBC Monthly said in a report, “The current environment is very difficult for global off-highway tire manufacturers. Michelin expects industrial tires to decline 5-7% and agricultural tires to decline 8-9%.” Titan International reported weak third quarter results due to a sharp decline in the heavy (agricultural) equipment market. ‘