Up to $1.3 billion will be raised by Mahindra for its Electric Vehicle division
According to a report on Wednesday, Indian automaker Mahindra & Mahindra Ltd. is in advanced talks with international investors to finance between $1 billion and 1.3 billion to speed up the expansion of its electric vehicle subsidiary.
According to the article, the business intends to raise cash by selling shares in its subsidiary, which are now valued at over $9.1 billion, in a number of tranches over the course of the next two fiscal years. Reuters contacted Mahindra for comment, but they did not get a response right away. Mahindra’s shares increased as much as 1.7% on Wednesday, but they remain down more than 6% for the year. In contrast, Tata Motors’ shares have increased by 7%.
The newspaper reported that the conglomerate with its headquarters in Mumbai may raise as much as $800 million to $1 billion in the first tranche as early as the first half of the fiscal year 2024. Mahindra, known for its jeeps and sports utility vehicles (SUVs), has increased expenditures to strengthen its electric vehicle (EV) capability as the Indian Government intends to expand the share of EVs to 30% of total yearly automobile sales from 1% by 2030.
To compete with Tata Motors, which dominates the Indian EV industry, the business announced intentions to invest 100 billion rupees ($1.21 billion) to build an EV production plant close to the western city of Pune. Moreover, Tata Motors is negotiating with private equity investors and sovereign wealth funds to raise up to $1 billion via a stake sale in its EV business, Economic Times reported in February.
“By 2040, The Mahindra Group wants to be Planet Positive. Anish Shah, MD & CEO of M&M, stated that Mahindra has been a leader in the field of electric vehicles and that the company is convinced it would dominate the market for electric SUVs in the future. The decision comes at a time when market leader, Tata Group is raising the stakes in the budding EV industry, even though M&M will use the money to develop and market an electric SUV range with cutting-edge technologies. The two partners, M&M and BII, will contribute $250 million each to EV Co, a totally owned subsidiary of M&M. The money will be invested by BII as obligatory convertible instruments, giving it a 2.75% to 4.76% ownership stake in the EV Business.
By 2027, M&M anticipates that 20–30% of its portfolio will consist of electric vehicles. EV Co will concentrate on four-wheel (4W) passenger electric vehicles. Rajesh Jejurikar, Executive Director – Auto & Agriculture sectors, Mahindra & Mahindra, told TOI, “We want to throw our weight behind electric vehicles and not hybrids. For the intended product portfolio, the EV Co. will receive $1 billion in total capital between FY24 and FY27. Together, M&M and BII will bring other investors in the EV Co to match the funding requirement in a phased manner.
