MUMBAJ / NEW DELHI : TVS Motor Co. Ltd is in advanced acquisition talks 4,000-5,000 crore from private equity firms to finance an expansion plan for the group’s newly formed Electric Mobility arm, two people with direct knowledge of the matter said.

“TVS wants to strengthen its leadership position in the electric vehicle segment through appropriate product offerings and increase its nationwide presence,” said one of the two people, asking for anonymity.

“Approximately $ 500-650 million can be raised by TVS Motor, which could be used for organic expansion and brownfield sites in the electric vehicle space. TVS wants to increase its share of the revenue from its electric vehicle business by taking advantage of the growing demand for electric vehicles worldwide. EV is clearly the future of mobility and TVS aspires to be a leader in this field, ”said the first person.

TVS Motors is doubling the number of electric vehicles as India is increasingly focused on reducing vehicle pollution in cities and reducing dependence on fossil fuels in the face of rising fuel prices.

Two-wheeler customers are also switching to electric scooters more and more as they want to cut fuel costs and reduce emissions in India’s highly polluted cities.

Excited by the industry’s prospects and the mandate to invest in clean tech, private equity firms and venture capital funds are investing huge amounts of money in EV start-ups in India. Financing for startups dealing with EV technologies reached an all-time high in 2021, amounting to $ 444 million in 25 odd transactions.

But it’s not just startups that benefit. For example, PE TPG Rise Climate has purchased a 15% stake in the Tata Motors electric vehicle industry for 7,500 crore in October.

Startups such as Ola Electric ($ 253 million), Blusmart ($ 25 million), Simple Energy ($ 21 million), Revolt ($ 20 million) and Detel ($ 20 million) attracted maximum investment in EV space in 2021.

In fact, TVS Motor invested in electric two-wheeler manufacturer Ultraviolette Automotive in December, while Amara Raja Batteries and Petronas Ventures invested in electric battery manufacturer Log9 Materials.

The fundraising trend shows investors’ growing appetite for electric vehicles and related businesses such as battery manufacturing and charging solutions.

“TVS is in advanced talks with PE players. The money is likely to be collected in the September quarter itself. To raise the money, the equity of TVS Motor’s subsidiary TVS Electric Mobility Ltd could be placed with investors. Depending on the transaction valuation for TVS Electric Mobility, a decision will be made on the size of the shares, but it seems that a large part of the shares of around 40% (in the subsidiary) could be sold by the parent TVS Motor to raise funds, some of them could be used to acquire startups in the EV space, said the second person, also asking for anonymity.

“The industry is set to grow fast and TVS has solid plans for this segment,” said the second person, adding that the government had announced several incentives to encourage the adoption of electric vehicles.

The email sent to the TVS spokesman did not elicit any response.

The latest TVS capital raising plan also aims to expand the partnership with BMW Motorrad to jointly develop new platforms and future technologies, including electric vehicles.

TVS had a 19% market share in the high-speed electric scooter segment in fiscal 2022.

TVS can use the proceeds from the proposed fundraising to build new facilities for electric vehicles and battery manufacturing, which is somewhat similar to the structure adopted by the Tata group which established a new renewable energy company as an outgoing subsidiary of Tata Power to ensure internal supply lithium batteries and related services for electric vehicles with tighter cost control.

TVS has sold over 10,000 electric vehicles in FY22, according to the company’s investor presentation. It works with Tata Power and Jio-BP to create a charging infrastructure for electric vehicles.

“TVS will focus in the coming months on offering consumers a variety of products under the iQube brand (EV scooter) so that they have access to the latest technology and connected commuting at an affordable price,” said the second person.

Electric two-wheelers account for 4.5% of all two-wheel registrations. However, many consumers are actively considering electric vehicles as a means of commuting.

“The industry has experienced solid growth, approximately 5.6 times. Increasing sensitivity to climate influences and a better TCO proposal, given rising fuel prices, resulted in accelerated consumer interest in the (EV) category… the government has strengthened consumer confidence in the segment, ”reads the TVS annual report.

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