Tata Motors Ltd (TML) said it had entered into a binding agreement whereby TPG Rise Climate along with its co-investor ADQ, will invest ₹7,500 crore [$1 billion] in a new subsidiary — to soon be incorporated — to focus exclusively on electric vehicles (EVs).
TPG Rise Climate and ADQ will be allotted compulsorily convertible instruments to secure between 11% and 15% stake in the company, currently named Tata Motors EVco. This will translate to a valuation of up to $9.1 billion, Tata Motors Group CFO P.B. Balaji told the media.
The EV unit will be Tata Motors’ second subsidiary, after Tata Motors Passenger Vehicles company (PVco) that has been hived off as a 100% subsidiary.
TML said the new firm would leverage existing investments and capabilities of TML and would channelise future investments into EVs, dedicated battery EV platforms, advanced automotive technologies, and catalyse investments in charging infrastructure and battery technologies.
Over the next five years, this company will create a portfolio of 10 EVs and in association with Tata Power Ltd., catalyse the creation of a widespread charging infrastructure to facilitate rapid EV adoption in India, TML said in a filing. All manufacturing for the new company will be done by the PVco which will also take care of distribution.
Chairman N. Chandrasekaran said: “We will continue to proactively invest in exciting products that delights customers while meticulously creating a synergistic ecosystem.”
Mr. Balaji said TML would invest ₹15,000 crore in the next 5 years in the EVco and the timing of the next round of funding would be decided later.
Jim Coulter, Managing Partner, TPG Rise Climate, and founding partner of TPG, said, “The investment aligns with TPG Rise Climate’s focus on decarbonised transport and builds on TPG’s long history in India.”
It is expected that the first round of capital infusion would be completed by March 2022 and the entire funds would be infused by the third quarter of FY22.