Tata Motors Ltd said Tuesday it has signed an agreement to raise Rs 7,500 crore ($1 billion) from private equity firm TPG and Abu Dhabi sovereign wealth fund ADQ for its electric vehicles business.
TPG Rise Climate and ADQ will pick up a stake of between 11% and 15 % stake in a new unit of Tata Motors at an equity valuation of up to $9.1 billion, the Indian automaker said in a statement.
TPG Rise Climate is the climate investing strategy of TPG’s global impact investing platform TPG Rise.
The first round of capital infusion will likely be completed by March 2022. The entire funds will be infused by the end of 2022.
Tata Motors said the new unit will channelise investments into electric vehicles, battery-powered EV platforms, advanced automotive technologies, charging infrastructure and battery technologies.
Over the next five years, this company will create a portfolio of 10 EVs and also create a charging infrastructure in association with Tata Power Ltd to facilitate rapid EV adoption in India.
Tata Motors chairman and Tata Group chief N Chandrasekaran said that TPG investment will help the automaker create “a market-shaping” electric passenger mobility business in India.
TPG founding partner and TPG Rise Climate managing partner Jim Coulter said there is significant momentum around India’s EV movement, supported by government 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,” he said.
Morgan Stanley and JP Morgan are the joint financial advisors to Tata Motors while BofA Securities India Ltd are representing TPG Rise Climate for this transaction.
Khaitan & Co are legal advisors to Tata Motors, Shardul Amarchand Mangaldas & Co, Cleary Gottlieb are legal advisors to TPG Rise for the transaction. The transaction is subject to conditions precedent and customary approvals.