Tata Motors and TPG Rise Climate on Tuesday entered into a binding agreement whereby the latter, along with its co-investor ADQ, shall invest in a subsidiary of the vehicle maker that will be newly incorporated.
TPG Rise Climate, along with co-investors, shall invest INR 7,500 crore in compulsory convertible instruments to secure between 11 % to 15 % stake in this company, translating to an equity valuation of up to $ 9.1 billion.
The new company shall leverage all existing investments and capabilities of Tata Motors and channel future investments into electric vehicles, dedicated BEV platforms, advanced automotive technologies and catalyse investments in charging infrastructure and battery technologies.
Over the next five years, this company will create a portfolio of 10 EVs and, in association with Tata Power, catalyse the creation of widespread charging infrastructure to facilitate rapid EV adoption in India.
N Chandrasekaran, Chairman Tata Motors, commented, “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.”
Jim Coulter, Managing Partner TPG Rise Climate and Founding partner of TPG, said, “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.”
It is expected that the first round of capital infusion will be completed by March 2022, and the entire funds will be infused by the end of 2022. Morgan Stanley and JP Morgan are the joint financial advisors to Tata Motors, while BofA Securities India 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.
The transaction is subject to conditions, precedent and customary approvals.