People aware of the matter stated that Tata Motors is in conversation with investors globally to raise around $500 – 600 million more for its expanding business of electric vehicles. The decision came just over a year after it obtained $1 billion from TPG’s Rise Climate Fund and Abu Dhabi state holding organisation ADQ.
The people stated that Tata Motors is looking at 15 to 20% of premium from the last round when Tata Passenger Electric Mobility was valued at $9.1 billion.
The top executives close to the development said that this move is part of an aspiring strategy by the leader in the market of electric passenger vehicles to raise major funds, through both internal and external sources. In order to assist its growth plans via product innovation, mainly of EV platform.
Tata Motors is in work with its advisor Morgan Stanely, and has approached various investors, impact funds, sovereign wealth funds from Singapore, Korea and the Middle East along with Canadian pension funds for the funding.
The conversation with possible investors are preliminary in nature and signing of non disclosure agreements (NDA) are in process. The company might raise the fundraising target relying on the appetite of the investors.
The analysts warned that however the premium sought might prove to be expensive. The first automaker to sell 50,000 electric passenger vehicles in a year is Tata Motors, which the company achieved in the year 2022. By selling the tiger EVs and the Nexon and also commanding a more than 80% market share.
An executive close to the company stated that the innovations and the growth at Tata Motors are tech led and sustainability focused.
It is expected of Tata Motors to sell part of the shares that are held by it in a unit as well as provide the investors with the new shares, which will aid it deleverage the balance sheet and also acquire growth equity for the expansion.
According to the presentation of the company, in the first half of financial year of 2023, Tata Motors net automotive debt totalled Rs 59,900 crore.
In December of 2021, Tata Motors incorporated the subsidiary, Tata Passenger Electric Mobility, to focus on design and development of all kinds of services in relation to passenger hybrid electric vehicles and passenger electric vehicles.
With an initial capital of Rs 700 crore Tata Motors became the promoter of the company. While announcing the spinning out of the EV vertical into a separate arm, in October of the same year, Tata Motors stated it planned to invest more than $2 billion in the EV over five years.
The company raised funds from two external investors ADQ and TPG Rise. The expectation of Tata Motors is that by the end of this decade about half of its sales should come from EVs. Tata Motors is ready to commence deliveries of Tiago EV, cost at Rs 8.49 lakh ex- showroom. It is also scheduled to introduce two more EVs within a short period.
In this financial year the industry is expecting to surge about 60,000 units, from 3,000 units three years ago. Passenger EVs are selling at a rapid pace.
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