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TPG Capital to invest Rs 7,500 crore in auto major Tata Motors EV subsidiary

Private equity company TPG Capital will invest Rs 7,500 crore in auto major Tata Motors Ltd’s (TML) recently incorporated wholly-owned electric vehicle (EV) subsidiary, TPG Group announced on Tuesday. The company’s board approved the formation of a new subsidiary that will undertake the electric business in India as the company gears up for competition with Tesla, Tata Motors said in an exchange filing.

US based company TPG Capital not a very long ago announced its climate focused financial fund TPG Rise Climate. Along with co-investors, Rise Climate “shall invest Rs 7,500 crore in compulsory convertible instruments to secure between 11 to 15 percent stake in this company translating to an equity valuation of up to $9.1 billion,” a press release from Tata Motors said.

The first round of capital infusion will be completed by March 22 and the entire funds will be infused by end of 2022, it further added. “After TML EVCo is incorporated, Tata Motors and TPG Rise Climate will enter into a shareholders’ agreement as a condition precedent to the Proposed Transaction,” Tata Motors said in the filling.

“I am delighted to have TPG Rise Climate join us in our journey to create a market-shaping electric passenger mobility business in India,” said N Chandrasekaran, chairman of Tata Motors. “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 a 30% electric vehicle penetration rate by 2030,” Chandrasekaran added.

Over the next five years, TML EVCo will create a portfolio of 10 EVs and invest in excess of $2 billion over the next 5 years in products, platforms, drive trains, dedicated EV manufacturing, charging infrastructure and advanced technologies.

In association with Tata Power Ltd, will go for widespread charging infrastructure to facilitate EV adoption. At present, Tata Motors leads India’s small electric PV market with over 70% market share. Its Nexon EV is India’s bestselling electric car and the company had recently launched the electric version of its Tigor model.

Jim Coulter, Managing Partner TPG Rise Climate and Founding partner of TPG, said, “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 RiseClimate’s focus on decarbonised transport and builds on TPG’s long history in India.”

Tata motors has been displaying consistent growth in their sales recently across its all three different verticals- PV, commercial vehicle and Jaguar Land Rover. Tata Motors Group global wholesales including JLR in Q2 FY22, were at 2,51,689 units, higher by 24%, as compared to Q2 FY21.

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