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Tata Motors to raise $1 bn in its PEV business at valuation up to $9.1 bn – Mint


Passenger and commercial vehicles maker Tata Motors Ltd (TML) on Tuesday said it has entered into a binding agreement with private equity investor TPG Rise Climate, along with co-investor ADQ, to invest 7,500 crore in a subsidiary of Tata Motors that will be newly incorporated to manage the electric vehicles (EV) business of the company, the automaker said in a statement.

Mint had first reported on 13 August that Tata Motors was in talks with private equity investors to raise as much as $1 billion for its EV business.

TPG Rise Climate along with co-investors shall invest 7,500 crore in compulsory convertible instruments to secure between 11 % to 15 % stake in this company translating to an equity valuation of up to $9.1 billion, the statement said.

The new company shall leverage all existing investments and capabilities of Tata Motors Ltd and will channelize the future investments into electric vehicles, dedicated BEV (battery electric vehicle) platforms, advanced automotive technologies and catalyze investments in charging infrastructure and battery technologies, the company said. Over the next five years, this company will create a portfolio of 10 EVs and in association with Tata Power Ltd, catalyze the creation of a widespread charging infrastructure to facilitate rapid EV adoption in India, it added.

N. Chandrasekaran, chairman, Tata Motors Ltd, commented, “I am delighted to have TPG Rise Climate join us in our journey to create a market-shaping electric passenger mobility business in India. We will continue to proactively invest in exciting products that delight customers while meticulously creating a synergistic ecosystem. We are excited and committed to play a leading role in the government’s vision to have 30% electric vehicles penetration rate by 2030.”

It is expected that the first round of capital infusion will be completed by 22 March and the entire funds will be infused by the end of 2022. Morgan Stanley and JP Morgan are the joint financial advisors to TML, while BofA Securities India Ltd are representing TPG Rise Climate for this transaction.

“We are excited to partner with Tata Motors on their mission to lead the electrification of passenger mobility in India. There is significant momentum around India’s EV movement, supported by the government’s vision and policies, as well as growing consumer demand for greener solutions. The investment aligns with TPG Rise Climate’s focus on decarbonized transport and builds on TPG’s long history in India,” said Jim Coulter, Managing Partner TPG Rise Climate and Founding partner of TPG.

Khaitan & Co are legal advisers to TML, Shardul Amarchand Mangaldas & Co., Cleary Gottlieb are legal advisors to TPG Rise for the transaction. The transaction is subject to conditions precedent and customary approvals.

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