Mahindra sounded afloat in discussions to raise up to $500 million to accelerate plans to build electric cars in India

Mahindra sounded afloat in discussions to raise up to $500 million to accelerate plans to build elec ...

Mahindra and other Indian automakers are in discussions to raise between $250 and $500 million (roughly Rs. 4,040 crore) to accelerate their plans to construct electric automobiles, according to a source with direct knowledge of the matter.

Mahindra is in early discussions with global green funds and private equity firms, according to the person, adding that it wants a long-term investor who can assist in expanding its electric vehicle business.

Several investors have expressed interest in participating in a funding round worth $800 million (roughly Rs. 6,470 crore), according to two banking industry sources, adding that they have in discussions with the company about such offers.

Mahindra is not actively looking to raise a higher amount than $250 million (roughly Rs. 2,020 crore) - $500 million (roughly Rs. 4,040 crore), but it is not limited to the idea of increasing the deal size depending on the terms and valuation, according to the first source.

"Mahindra wants to bring a leading investor on board, but he does not intend to lower a large share at the moment," he said, adding that these plans are at an early stage and subject to changes.

Mahindra''s new electric vehicle, which is raising funds, was valued at $9.1 billion (roughly Rs. 73,570 crore) in July, after its first raise of $250 million (roughly Rs. 2,020 crore) from British International Investment (BII).

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It was not immediately clear what valuation the investors are offering or what the company is looking for in the new round.

Mahindra spoke in a statement that she has pledged to invest $500 million in the electric SUV space with the help of BII, and that the two companies will collaborate to bring other "like-minded, climate-focused investors" in the electric vehicle industry.

The discussions come following Mahindra''s outlined an ambitious strategy to launch five electric SUVs in the next few years and is targeting such models to make up 30% of its annual SUV sales by March 2027. The first electric SUV will be available for sale in January.

The money will assist the automaker in establishing a war chest in order to compete against Tata Motors, which is now leading India''s electric car market.

Tata, which made $1 billion (roughly Rs. 8,080 crore) from TPG''s Rise Climate Fund, which acquired its electric vehicle, at an valuation of $9.1 billion, making it the first major clean mobility deal in India.

Electric vehicles represent a 1% increase in global vehicle sales of around 3 million units in India, the world''s fourth largest vehicle market. The government hopes to increase this to 30 percent by 2030 and is offering corporations billions of dollars to help develop electric vehicles and their components locally.

Mahindra has partnered with Volkswagen to acquire electric drivetrains and batteries for its electric vehicles, and the two are also exploring joint vehicle projects, including building battery cells locally, and developing charging solutions. Besides, Mahindra''s fundraising comes at a time when India''s clean mobility transition is experiencing "more money" chasing "significant assets."

According to a third banking source, some of the current investor interest is a result of Mahindra''s first fundraise.

2022 Thomson Reuters