Formation of Subsidiary
Board of Directors of Tata Motors have approved the formation of the subsidiary ‘TML EVCo’. This subsidiary will undertake the parent company’s passenger electric mobility business.
Investment by TPG
TPG Rise, a fund formed by private equity group TPG will invest an aggregate of Rs. 7,500 crore in ‘TML EVCo’. The investments will be done in tranches by the Private Equity company. The time period for this investment is a period of 18 months from the investment of the 1st tranche.
‘TML EVCo’ will be issuing compulsory convertible preference shares to TPG in lieu of the above-mentioned investment.
TPG Rise will get an equity stake of up to 11%-15% in ‘TML EVCo’. The amount raised by issuing this much equity stake takes the valuation of ‘TML EVCo’ to $9.1 billion (~ Rs. 69,000 crores).
The first round of capital infusion will be completed by March 22 and the complete infusion of funds will be completed by end of 2022.
The newly formed company will benefit from and leverage all the existing capabilities and investments of Tata Motors. The future investments will be used to develop and improve electric vehicles, dedicated BEV platforms, advanced automotive technologies and would also be used to develop battery technologies and charging infrastructure.
The company will be creating a portfolio of 10 EVs with the association of Tata Power, the group will also be able to increase the creation of widespread charging infrastructure facilitating rapid EV adoption across the country.
Comments by N. Chandrasekaran, Chairman Tata Motors
The company will keep investing in technologies to delight its customers and also support in the government’s aim to reach up to 30% EV penetration by 2030.
Comments by Jim Coulter, Managing Partner at TPG Rise Climate and Founding Partner TPG
The fund is excited to partner with Tata Motors is leading the electrification of passenger mobility in India. EVs are gaining significant momentum in India due to Govt’s support and policies and also an increase in consumer demand to adopt green solutions.
The investment is in alignment with TPG Rise Climate’s aim to decarbonize transport.