July 11, 2022
Blog Admin
M&M, British Int’l Investment to build portfolio of five e-SUVs
Mahindra and Mahindra and British International Investment -backed EV Co have charted out plans to co-develop a portfolio of five electric SUVs through the formerās wholly-owned subsidiary, into which the two firms shall invest around Rs 10,000 crore over the next four years. The agreement marks one of the major investments in the e-mobility space. Mahindra is the latest among the legacy auto firms to tap the green fund. The aforementioned e-SUV portfolio will include the electrified version of the XUV3OO (to be called XUV4OO) to be unveiled in September 2022 and available for sale in January 2023 and four pure electric SUV platforms
BII and M&M have reached a binding agreement to co-invest Rs 3,850 crore (Rs 1,925 crore each) at a valuation of Rs 70,070 crore ($9.1 billion) in the yet-to-be-named EV company, M&M informed the stock exchanges . The Indian company would invest Rs 1,925 crore in two tranches — Rs 1,200 crore by June 2023 and Rs 725 crore on certain pre-decided company milestones.
The company has taken a leaf out of Tata Motorsā playbook. In October 2021, the Tata Group flagship sought an investment of $1 billion (then Rs 7,500 crore) from TPG Rise Climate for its EV arm, Tata Passenger Electric Mobility , at a valuation of $9.1 billion.
“We are very confident that we will take leadership in this (EV) space,ā said Anish Shah, MD & CEO, Mahindra and Mahindra, during an investor-analyst meeting on Friday.
Mahindra would work jointly with BII to bring other investors into the EV company to match the funding requirement in a phased manner, said Shah.By 2026-27, M&M expects its e-SUVsā share to be 20-30 per cent of its overall SUV portfolio.
The supposed high valuation for an entity that is currently on paper — with no products has failed to enthuse the Street. This is in contrast with Tata Motors.
When Tata Motors stitched the deal with TPG, it had products and a share of 75 per cent in the e-passenger vehicle market. āTherefore, investors are looking at the whole (M&M-BII) deal with scepticism.
The company will unveil its āborn electricā strategy in its newly opened design studio in Oxfordshire, the UK, which has been instrumental in designing these concepts. Mahindra is also exploring a partnership with Germany’s Volkswagen to source EV components .
The EV company will utilise Mahindraās product development set-ups in Detroit, Bengaluru, and Chennai. Besides manufacturing, Mahindra would also engage in non-EV part sourcing.
āFor BII, itās a long-term commitment with Mahindra,ā said Samir Abhyankar, MD and head of direct private equity at BII. The British Government-backed fund is not planning any investment in a rival company, as of now.
Investment plan-out for the proposed EV subsidiary
BII to invest up to Rs 1925 cr in two tranches (Rs.1,200 cr & Rs 725 cr)
M&M to co-invest Rs 1925 crore
BII Ownership: 2.75% to 4.76%
EV Co valuation-Rs70,070 crore ($9.1 billion)
EV Co to invest approx. Rs 8,000 cr between F24-F27
The new entity to be asset light
M&M’s ED (farm & auto biz) will dual-hat by leading the EV Co and shall report to Board
M&M to provide design, product development, technology & sourcing services
M&M and BII will work jointly to bring other investors in the EV Co
EV Co will house all the EV brands, IP for 4-wheeler e-PVs
ICE specific brands like āXUVā to be licensed
By F27 SUV portfolio likely to have volumes of 200,000 units/annum
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