Tata Motors to raise $1 bn in its passenger EV business from TPG Group

Tata Motors Ltd (TML) and TPG Rise Climate have today entered into a binding agreement whereby TPG Rise Climate, along with its co-investor ADQ, will invest in a subsidiary of Tata Motors that will be newly incorporated. The first round of capital infusion will be completed by March 22 and the entire funds will be infused by end of 2022, Jim Coulter, Managing Partner, TPG Rise Climate and Founding partner of TPG, said.

TPG Rise Climate, along with co-investors, will invest Rs 7,500 crore in compulsory convertible instruments to secure between 11 per cent to 15 per cent stake in this company translating to an equity valuation of up to $9.1 bn.

The new company will leverage all existing investments and capabilities of Tata Motors Ltd and will channelise the future investments into electric vehicles, dedicated BEV platforms, advanced automotive technologies and catalyse investments in charging infrastructure and battery technologies.

Over the next 5 years, this company will create a portfolio of 10 EVs and in association with Tata Power Ltd, catalyse the creation of a widespread charging infrastructure to facilitate rapid EV adoption in India.

N Chandrasekaran, Chairman Tata Motors, said the company 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,” he added.

Coulter said the company is excited to partner with Tata Motors. "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 decarbonised transport and builds on TPG’s long history in India.”

Morgan Stanley and JP Morgan were the joint financial advisors to TML, while BofA Securities India Ltd are representing TPG Rise Climate for this transaction. Khaitan & Co are legal advisors to TML, Shardul Amarchand Mangaldas & Co, Cleary Gottlieb are legal advisors to TPG Rise for the transaction.

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