M&M To Sell Stake In New EV Arm To British International Investment

Mahindra & Mahindra Ltd. executed a binding agreement to sell stake in its new electric vehicle arm to British International Investment Plc.

The automaker incorporated a wholly owned subsidiary and will transfer the EV assets to the new company, according to its exchange filing. The new firm will see a capital infusion of Rs 3,850 crore, equally split between M&M and BII, in two tranches.

BII will invest Rs 1,925 crore in new EV company via compulsory convertible instruments at a valuation of up to Rs 70,070 crore. Upon conversion, BII will own 2.75% to 4.76% stake in the EV company.

Both the companies will invest Rs 1,200 crore each in the first tranche and Rs 725 crore each in the second tranche. The first tranche is expected to be completed by June 30, 2023 and the second closing is expected in FY24.

The funds will be used to create and market electric SUVs with advanced technologies.

"M&M and BII will work jointly to bring other like-minded investors in the EV company to match the funding requirement in a phased manner," it statement said.

M&M joins Tata Motors Ltd. in carving out the EV business to draw investments as India’s carmakers prepare for a future dominated by battery-powered mobility. Tata Motors EV unit had raised Rs 7,500 crore from TPG Rise Climate and ADQ last year.

M&M has invested Rs 400 crore so far in the EV business. Its electric portfolio comprises a sedan, two types of three-wheelers and a van.

In the EV segment, M&M is focusing on last-mile mobility (Treo & Treo Zor), converting internal combustion models to electric, like upcoming eXUV300 and Born Electric Platform, M&M had said in its annual report.

In FY22, M&M's passenger vehicle sales volume rose 43.7% year-on-year to 2,25,895 vehicles, including 2,23,682 utility vehicles, 2,154 vans and 59 cars.