The shareholding of Hero MotoCorp has been capped at 40 per cent in the electric scooter company Ather Energy, which the former has already achieved through the recent rights issue of Rs 900 crore.
Any subsequent increase would require a green signal from the promoters led by Tarun Mehta, who is also the company’s chief executive officer (CEO), it is learnt.
The cap has been incorporated in a private agreement signed between the two companies. This allays concerns raised by some stakeholders that Hero MotoCorp, led by Pawan Munjal, whose own foray into electric scooters has not taken off, may increase its stake in Ather to a majority in fresh rounds, and that it can, through a secondary sale, and acquire the company. Under the plan, Ather Energy promoters, who have around 15-16 per cent in the company, can increase their stake based on various milestones.
Nikhil Kamath, founder of online stock trading platform Zerodha, who has also taken a stake in Ather, is believed to be willing to bet more in the company. But existing investors are not selling right now. A spokesperson of Ather declined to comment on the issue.
Hero MotoCorp also declined to comment.
Sources aware of the partnership point out that Hero MotoCorp has been a patient investor and has supported the company in every fund raise. Once the IPO happens, it could also participate in an offer for sale to the existing investors.
Ather recently raised funds to the tune of Rs 900 crore through a rights issue to which existing investors, Hero MotoCorp and Singapore’s sovereign wealth fund GIC, subscribed. Hero MotoCorp invested Rs 550 crore in Ather this time, thereby increasing its stake in the company to 40 per cent from 36.6 per cent earlier. With this, Ather has raised a total of $400 million since its inception.
The electric scooter company is looking at bringing forward its earlier plan to go for an initial public offering (IPO) only when it starts making profits or is Ebitda-positive. Though CEO Tarun Mehta had in August last year said it could happen 24 months down the line, with the launch of the family scooter sometime in the first quarter of this year, the company expects to ramp up volumes and start work on an IPO by the end of 2024.
Ather could cash in on the fact that the benchmarking of the company’s value can be done more objectively at that time, as by then Ola Electric, which plans to go for its IPO in March this year, would have been listed.
 "Hero MotoCorp stake in electric scooter firm Ather Energy capped at 40%")
