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India’s Tata Motors raises USD1 billion for EV subsidiary

India's Tata Motors raises USD1 billion for EV subsidiary
N. Chandrasekaran, Tata Motors (left) and Jim Coulter (right), TPG Rise Climate

Leading Indian automaker Tata Motors Ltd (TML) has entered into a binding agreement with TPG Rise Climate, along with its co-investor ADQ, to sell a stake of between 11% and 15% in its newly formed electric vehicle (EV) subsidiary. TPG Rise Climate, along with its co-investors, will invest INR7,500 crores (USD1 billion) in  compulsory convertible instruments. The investment translates to an  equity valuation of up to USD9.1 billion in Tata Motors’ EV subsidiary. According to Reuters, Tata Motors plans to invest USD2 billion in its EV business, following the investment from the private equity firm chaired by former U.S. Treasury Secretary Hank Paulson.

The new company shall leverage all existing investments and capabilities of Tata Motors Ltd. Tata Motors currently dominates EV sales in India with its electric SUV Nexon and Tigor compact EV, and plans to launch 10 new electric vehicle models by 2025. Over the next five years, and in association with Tata Power Ltd, Tata Motors plans to create a widespread charging infrastructure to facilitate rapid EV adoption in India.  

Leading role in India’s goal to reach 30% EV penetration by 2030

“I am delighted to have TPG Rise Climate  join us in our journey to create a market-shaping electric passenger mobility business in India. We will  continue to proactively invest in exciting products that delights customers while meticulously creating a  synergistic ecosystem. We are excited and committed to play a leading role in the Government’s vision to  have 30% electric vehicles penetration rate by 2030,” said N. Chandrasekaran, chairman of Tata Motors Ltd.

“We are  excited to partner with Tata Motors on their mission to lead the electrification of passenger mobility in India.  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 Rise Climate’s focus on decarbonized transport and builds on TPG’s long history in India,” said Jim Coulter, managing partner, TPG Rise Climate, and founding partner of TPG. 

The first round of capital infusion by TPG Rise Climate is expected to occur in March 2022 and the transfer of the entire investment is expected to be completed by the end of 2022. Morgan Stanley and JP Morgan are the joint financial advisors to Tata Motors Ltd, while BofA  Securities India Ltd represented TPG Rise Climate in this transaction. 

Khaitan & Co are the legal advisors to Tata Motors Ltd; Shardul Amarchand Mangaldas & Co, Cleary Gottlieb are the legal advisors to TPG Rise Climate for the transaction.  

The transaction is subject to customary approvals and other conditions.

TPG Rise Climate takes a broad-based sector approach to investment types, from growth equity to value added infrastructure, and focuses on five climate sub-sectors: clean energy, enabling solutions, decarbonized transport,  greening industrials, and agriculture & natural solutions.  

Based in Abu Dhabi, ADQ is one of the region’s largest holding companies, with direct and indirect  investments in more than 90 companies locally and internationally. 

Tata Motors is part of the USD109 billion Tata group. With operations in India, the UK, South Korea, Thailand, South Africa, and Indonesia, supported by a strong global  network of 103 subsidiaries, 9 associate companies, 4 joint ventures and 2 joint operations as on March 31, 2021, Tata  Motors’ commercial and passenger vehicles are marketed in countries, spread across Africa, Middle East, South & South  East Asia, Australia, South America, Russia and other CIS countries. Tata Motors’ subsidiary, Jaguar Land Rover (JLR), is Britain’s largest automotive manufacturer which designs, manufactures and sells some of the world’s best-known premium cars. The two iconic brands of JLR include Jaguar, with a range of luxury sedans, sports cars and luxury performance SUVs, and Land Rover, encompassing a portfolio of premium all-terrain vehicles.