British International Investment (BII), the United Kingdom’s Development Finance Institution and impact investor and Mahindra & Mahindra (M&M) have executed a binding agreement to invest up to Rs 1,925 crore each into a newly incorporated Mahindra subsidiary for electric vehicles (EV).
As per the understanding, BII will invest up to Rs 1,925 crore in the form of compulsory convertible instruments at a valuation of up to Rs 70,070 crore, which will give the company a stake of 2.75% to 4.76% in the new EV Co.
The subsidiary will focus on electric passenger vehicle segment. The total capital infusion for the EV Co. is envisaged to be approximately Rs 8,000 crore / $1 billion between FY 2024 and FY 2027 for the planned product portfolio.
In addition, the partners will also work towards bringing other like-minded investors to match the funding requirement in a phased manner. Mahindra says that BII’s investment is designed to significantly accelerate the availability and adoption of electric vehicles in India and other markets served by it.
The investment alongside Mahindra in the new EV company will supports BII’s undertaking that at least 30 per cent of its total investments will be in climate finance. The EV Co will significantly leverage the broader manufacturing capabilities, product development, design organisations along with the ecosystem of suppliers, dealers, and financiers of Mahindra.
The funds will be utilised primarily to create and market a world-class electric SUV portfolio with advanced technologies.
Dr. Anish Shah, MD and CEO, Mahindra & Mahindra said: “We are extremely delighted to have BII as a partner in our SUV electric journey. In BII, we have found a like-minded long-term partner who is committed to combating the climate emergency. The Mahindra Group aims to be Planet Positive by 2040. Mahindra has been a pioneer in the electric vehicles space, and we are confident we will be the leaders in the electric SUV market in the future.”
Nick O’Donohoe, CEO, British International Investment said, “BII’s anchor investment will be key to attracting additional sources of private capital into this exciting venture with the Mahindra Group. The acceleration of EV development in India will be critical to supporting the country in reaching its emission targets as well as improving air quality in many urban areas. Mahindra will play a central role in the decarbonisation of the automotive industry in India and elsewhere.”
Rajesh Jejurikar, ED – Auto & Farm Sectors, Mahindra & Mahindra said, “Mahindra has very exciting plans to be a leader in the electric SUV space. We would share our vision that includes our comprehensive product, technology, and platform strategy at the UK event on August 15, 2022, followed by a reveal of the electric XUV 400 in September 2022. We would expect between 20-30% of Mahindra SUVs being electric by 2027”.
Samir Abhyankar, MD and Head of Direct Private Equity, British International Investment said: “Climate change is one of the biggest challenges of our time. The investment into Mahindra’s EV business is in line with our decarbonisation strategy and focus of supporting sustainable business models that create new jobs, particularly for women. We are delighted to be backing Mahindra to execute on their compelling EV strategy and ambition and crowd in other like-minded investors in the future.”