NEW DELHI/HONG KONG:
The automaker Mahindra & Mahindra is in talks with global investors to raise between $250 million and $500 million to accelerate its plans to build electric vehicles (EVs), a source with direct knowledge of the matter told Reuters.
Mahindra is in early talks with global green funds and private equity firms, the person said, adding that it wants a long-term investor who can help build its EV business.
However, some investors in recent months have expressed interest in getting involved in a financing round worth about $800 million, two banking industry sources said, adding that they have held talks with the company about such offers.
While Mahindra is not actively seeking any amount above $250-$500 million, it is not closed to the idea of raising the deal, subject to terms and valuation, the first source said.
“Mahindra wants to bring a benchmark investor on board, but doesn’t want to dilute a major stake at this point,” he said, adding that these plans are at an early stage and subject to change.
Mahindra’s new EV unit it is raising money for was valued at $9.1 billion in July after British International Investment (BII)’s initial $250 million raise.
It was not immediately clear what valuation the investors are offering or what the company is looking for for the new round.
Mahindra told Reuters in a statement that it has pledged to invest $500 million with BII in the electric SUV space, and that the two companies will work together to bring other “like-minded, climate-focused investors” into the EV unit.
The talks come weeks after Mahindra outlined an ambitious plan to bring five electric SUVs to market over the next few years and aims to bring to market 30% of total annual SUV sales of such models by March 2027. The carmaker’s first electric SUV is expected to be available for sale in January.
The funds will help the automaker build a war chest to compete with rival Tata Motors, which dominates India’s emerging electric car market.
Tata raised $1 billion last year from TPG’s Rise Climate Fund for its EV unit at a valuation of $9.1 billion, making it India’s first major clean mobility deal.
In India, the fourth largest car market in the world, electric models make up only 1% of total annual car sales of about 3 million units. The government aims to grow this to 30% by 2030, offering companies billions of dollars in incentives to build EVs and their components locally.
Mahindra has partnered with Germany’s Volkswagen to source components such as electric powertrains and batteries for its electric SUVs, and the two are exploring joint vehicle projects, building battery cells locally and developing charging solutions.
The automaker has said it is open to investing in a battery cell manufacturer to secure future supplies, and is also evaluating the need to set up production capacity for EVs, according to local media reports.
Mahindra’s fundraising also comes at a time when there is growing investor interest in India’s clean mobility transition, resulting in “more money chasing few assets,” according to one of the two banking sources.
Part of the current investor interest is a spillover from Mahindra’s first fundraising, a third bank source said.