Temasek to invest Rs 1,200 cr in M&M's EV business at Rs 80,580-cr valuation, to hold stake up to 3%

Singapore’s Temasek has agreed to invest Rs 1,200 crore in Mahindra Electric Automobile Limited, Mahindra & Mahindra’s EV business arm, in one or more tranches, the auto company said on Thursday. The total valuation of the deal, which has been finalised between Mahindra Electric Automobile and Jongsong Investments Pte. Ltd., a unit of Temasek, can go up to Rs 80,580 crore.

Following the investment, Temasek will hold a stake in the range of 1.49-2.97 per cent in the EV business, the company said in a stock exchange notification.

Temasek Holdings is a global investment company with a net portfolio value of $287 billion as of 31st March, 2023.

The auto company in its regulatory filing said upon subscription to compulsory convertible preference shares (CCPS), Temasek would get certain rights as a shareholder - such as governance and affirmative voting rights, pre-emptive rights to participate in future funding rounds and minority protection rights, transfer related rights, exit rights, information rights, and others, as stipulated in the aforesaid agreements.

"The securities subscription agreement and shareholders' agreement inter alia provide for investment by Temasek of Rs 1,200 crore in compulsorily convertible preference shares of MEAL, in one or more tranches, in accordance with the terms and conditions as stipulated in the aforesaid agreement, valuing MEAL upto Rs 80,580 crores. The above investment also envisages Temasek having a nominal shareholding of 100 Equity Shares in MEAL," the company said in a regulatory filing.

With the deal, Temasek and British International Investments (BII) are the two investors in MEAL. It is to be noted that BII had earlier signed an agreement with Mahindra Electric to invest Rs 1,925 crore ($250 million) in July 2022 through the compulsory convertible preference shares (CCPS).

BII, following the investment, would hold a stake of 2.75-4.76 per cent, depending upon milestones achieved.

"Globally known for their strong governance, Temasek’s investment is a step forward, as we execute our strategy towards future leadership in electric SUVs. The valuation of up to $9.8 billion is testimony to Mahindra’s EV business and the progress we have made in the journey towards scaling up the electric SUV portfolio," said Anish Shah, MD & CEO, Mahindra & Mahindra.

MEAL’s valuation has increased by 15 per cent from up to Rs 70,070 crore to up to Rs 80,580 crore. The amount invested is consistent with the Mahindra Group’s plan to minimise dilution, the company said.

Rajesh Jejurikar, Executive Director and CEO, Auto & Farm Sectors, Mahindra & Mahindra, said: “We demonstrated Mahindra’s ambition to build a desirable global brand with the reveal of our born EV portfolio based on the INGLO platform in August 2022 in the UK, which is on track for execution. By having Temasek as an investor, we have strengthened our global strategic partnerships and are targeting 20% to 30% of Mahindra SUVs sales from electric vehicles by 2027.”

The company plans to launch five new EV models between April and October 2025. Mahindra expects electric models to make up between 20 and 30 per cent of its total SUV sales by March 2027 and is struggling to meet demand for the newly launched SUVs amid supply chain challenges.

In its stock exchange filings, Mahindra has earmakrked a capital expenditure of close to Rs 10,000 crore in its EV subsidiaries between FY22 and FY27. Of this, Rs 4,000 crore will be invested between FY22 and FY24, and the rest until FY27.

The company has said it has a clear focus on leading ESG globally, enabling rural prosperity and enhancing urban living, with a goal to drive positive change in the lives of communities and stakeholders to enable them to Rise.

Shares of Mahindra & Mahindra are trading at Rs 1,470, 1 per cent lower. The company will be reporting its June quarter results tomorrow, August 4.

In June, Temasek said it will lead a $300-$350 million round in Ola Electric. The private equity fund said it is interested in investing $100-150 million in the electric vehicle manufacturer. Following the fund infusion, Ola Electric's valuation is expected to touch $6 billion. Temasek made its first investment in Ola Electric in 2021 as part of a $53 million round, valuing the EV company at $2.7 billion.

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