Tata Motors soars on securing $1 bn investment from TPG for electric vehicle subsidiary

Shares of automaker were locked in 10% upper circuit at Rs 462.85 on the BSE.

Tata Motors said that it has entered into a binding agreement with TPG Rise Climate, whereby TPG Rise Climate along with its co-investor ADQ, shall invest in a subsidiary of the company that will be newly incorporated.

TPG Rise Climate is the dedicated climate investing strategy of TPG's global impact investing platform TPG Rise. TPG Rise Climate pursues climate-related investments that benefit from the diverse skills of TPG's investing professionals, the strategic relationships developed across TPG's existing portfolio of climate-focused companies, and a global network of executives and advisors.

Established in Abu Dhabi in 2018, ADQ is one of the region's largest holding companies with direct and indirect investments in more than 90 companies locally and internationally. Both an asset owner and investor, ADQ's broad portfolio of major enterprises span key sectors of a diversified economy, including energy and utilities, food and agriculture, healthcare and pharma, and mobility and logistics, amongst others.

TPG Rise Climate along with co-investors shall invest Rs 7,500 crore in compulsory convertible instruments to secure between 11% to 15% stake in this passenger electric vehicle subsidiary (TML EV Co.) of Tata Motors, 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 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, catalyse the creation of a 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.

Tata Motors expects the first round of capital infusion to be completed by March 2022 and the entire funds will be infused by end of 2022. The transaction is subject to conditions precedent and customary approvals.

Tata Motors is a global automobile manufacturer of cars, utility vehicles, pick-ups, trucks and buses.

The auto major's consolidated net loss contracted to Rs 4,450.92 crore in Q1 FY22 as compared to a net loss of Rs 8,437.99 crore in Q1 FY21. Total revenue from operations soared 107.63% YoY to Rs 66,406.45 crore in Q1 FY22.

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