Investing US$1bn in Electric Vehicles (EVs)
Announced by Tata Motors and TPG Rise Climate, the two organisations have entered into a binding agreement where TPG Rise Climate and its co-investor ADQ will invest in the automotive manufacturer’s subsidiary that will be newly incorporated.
Investing US$1bn in compulsory convertible instruments, TPG Rise Climate and co-investors will secure between 11 and 15% stake in the new company, equating to an equity valuation of up to US$9.1bn. News of the investment, saw Tata Motors’ shares increase by nearly 10%.
“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,” said N Chandrasekaran, Chairman Tata Motors Ltd.
Leveraging the US$1bn Investment
Tata Motors’ new company will leverage existing investments and capabilities of the parent company, channelling future investments in electric vehicles (EVs), dedicated BEV platforms, advanced automotive technologies and catalyse investments in charging infrastructure and battery technologies.
In the next five years, the new company will create a portfolio of 10 EVs, as well as drive the creation of widespread charging infrastructure in India alongside Tata Power Ltd. to facilitate the rapid adoption of EVs
“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 decarbonised transport and builds on TPG’s long history in India,” added Jim Coulter, Managing Partner TPG Rise Climate and Founding partner of TPG.
When Will Tata Motors Begin to Benefit from the Investment?
Subject to conditions precedent and customary approvals, the first round of capital infusion is expected to be complete by March 22, with the entire funds infused by the end of 2022. Both Morgan Stanley and JP Morgan are the financial advisors for Tata Motors, while TPG Rise Climate is being represented by BofA Securities.
In addition, Khaitan & Co are legal advisors for Tata Motors, and Shardul Amarchand Mangaldas & Co and Cleary Gottlieb are the legal advisors for TPG Rise Climate