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MUMBAI, 23 September 2022: Mahindra & Mahindra, an Indian automaker, is in discussions with international investors to raise between USD 250m (INR 2,023 crore) and USD 500m (INR 4,052 crore) to advance its aspirations to produce electric cars (EVs), Reuters’ report cited a source with firsthand knowledge of the situation.
Initial consultations
The source added that Mahindra is in preliminary discussions with international green funds and private equity firms and that the company seeks a long-term investor who can help it expand its EV business.
However, some investors have recently expressed interest in taking part in a capital round valued at roughly USD 800m (INR 6484crore), according to two banking industry insiders, who also stated that they had spoken with the company about such possibilities, report added.
Mahindra is not actively seeking to raise more funds than between USD 250m and USD 500m, but it is open to the concept of doing so based on the conditions and valuation, according to the first source.
He added that these plans are in the early stages and are susceptible to change, saying that Mahindra wants to bring a benchmark investor on board but does not want to dilute a sizable share at the moment.
After receiving its initial funding of USD 250m from British International Investment (BII), Mahindra’s new EV unit, for which it is raising the fund, was valued at USD 9.1bn in July.
It was unclear right away what valuation the investors were proposing or what the company was looking for in the fresh round.
In a statement to Reuters, Mahindra said that along with BII, it has committed to spending USD 500m in the market for electric SUVs. The two businesses will also cooperate to attract additional “like-minded, climate-focused investors” to the EV sector.
Mahindra’s fundraising effort also coincides with a rise in investor interest in India’s shift to clean mobility, which, according to one of the two banking sources, has led to “more money chasing few assets.”
Contest for EVs
The discussions take place only weeks after Mahindra unveiled an ambitious plan to introduce five electric SUVs over the next few years, with the goal of having these models account for 30 percent of its overall annual SUV sales by March 2027. In January, the automaker’s first electric SUV is anticipated to go on sale.
By raising the funds, the company will be able to compete with Tata Motors, which dominates the nascent electric car market in India.
Tata’s EV valuation
Tata Motors collected USD 1bn from TPG’s Rise Climate Fund last year for its EV operation at a valuation of USD 9.1bn, making it the country’s first significant clean mobility investment.
In India, the fourth-largest auto market in the world, only 1 percent of the approximately 3 million units of cars sold each year are electric versions. The government is providing businesses with billions of dollars in incentives to produce EVs and their components locally in order to increase this to 30 percent by 2030.
Mahindra’s collaboration with VW
Mahindra has teamed with Volkswagen of Germany to obtain parts for its electric SUVs, such as electric drivetrains and batteries, and the two are exploring joint vehicle ideas, producing battery cells locally, and creating charging infrastructure.
