Temasek to invest ₹1,200 cr in Mahindra's EV unit

Singapore's sovereign wealth fund Temasek will invest ₹1,200 crore in Mahindra Electric Automobile Ltd, the four-wheeler passenger electric vehicle subsidiary of Mahindra & Mahindra (M&M), to acquire up to 2.97% stake in the EV unit.

With this investment, Mahindra's EV subsidiary's valuation has jumped by 15% from ₹70,070 crore to up to ₹80,580 crore, the Mahindra Group-owned carmaker says in a stock exchange filing.

Temasek has signed a binding agreement to invest in Compulsorily Convertible Preference Shares (CCPS) of Mahindra Electric Automobile at a valuation of up to ₹80,580 crore, giving the sovereign fund a 1.49% to 2.97% stake.

Upon subscription to CCPS, Temasek would get certain rights as a shareholder including governance as well as affirmative voting rights, pre-emptive rights to participate in future funding rounds and minority protection rights among others, the filing says.

"Temasek's investment is a step forward, as we execute our strategy towards future leadership in electric SUVs. The valuation of up to $9.8 billion is testimony to Mahindra's EV business and the progress we have made in the journey towards scaling up the electric SUV portfolio," says Anish Shah, managing director and CEO, Mahindra & Mahindra.

The global investment firm joins British International Investments (BII) as an investor in Mahindra Electric Automobile.

The carmaker says the breadth of global experience of these marquee investors will be valuable for its EV subsidiary. The amount invested is consistent with the Mahindra Group's plan to minimise dilution, it says.

"By having Temasek as an investor, we have strengthened our global strategic partnerships and are targeting 20% to 30% of Mahindra SUVs sales from electric vehicles by 2027," says Rajesh Jejurikar, executive director and CEO, Auto & Farm Sectors, Mahindra & Mahindra.

India is targeting 30% of all new car registrations to be EVs by 2030. EV uptake in India rose sharply in 2022, with electric car sales quadrupling to nearly 50,000 vehicles from 12,000 in 2021, while total car sales increased by just below 15%, according to the International Energy Agency (IEA). Electric car sales in India in the first quarter of 2023 are already double what they were in the same period in 2022, it says.

Tata Motors accounted for over 85% of battery electric vehicles sales, including through sales of its small BEV Tigor and Tiago, which quadrupled, the agency says.

Around 38,359 electric cars were sold in India in the first six months of 2023, according to data obtained from the government's Vahan portal.