TPG Rise to invest Rs 7,500 cr in Tata Motors' EV arm at $9.1-bn valuation

TaMo and TPG Rise Climate have entered into a binding agreement under which TPG Rise Climate along with its co-investor ADQ, will invest in a subsidiary of TaMo that will be newly incorporated

Homegrown auto major Tata Motors on Tuesday said it will raise $1 billion (Rs 7,500 crore) in its passenger electric vehicle business from TPG Rise Climate at a valuation of up to $9.1 billion. Tata Motors Ltd (TML) and TPG Rise Climate, the dedicated climate investing strategy of private investment firm TPG, have entered into a binding agreement in this 

Under the agreement, TPG Rise Climate along with its co-investor ADQ, will invest in a subsidiary of Tata Motors that will be newly incorporated, the company said in a statement.

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

ADQ is a strategic partner of Abu Dhabi's government and is one of the region's largest holding companies with direct and indirect investments in more than 90 companies locally and internationally.

Commenting on the development, Tata Motors Chairman N Chandrasekaran said,"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." He further said the company is "committed to playing a leading role in the government's vision to have 30 per cent electric vehicles penetration rate by 2030." The new EV company will leverage all existing investments and capabilities of TML 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," the statement said.

Commenting on the investment, TPG Rise Climate Managing Partner and Founding partner of TPG, Jim Coulter said,"There is a 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." Tata Motors said the first round of capital infusion is expected to be completed by March 2022 and the entire funds will be infused by the end of 2022.

It is expected that the first round of capital infusion will be completed by March 22 and the entire funds will be infused by end of 2022. Morgan Stanley and JP Morgan are 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. 

The transaction is subject to conditions precedent and customary approvals.

The company, which sells EVs such as the Nexon EV and Tigor EV, had achieved cumulative EV sales of 10,000 units in September this year.