Venture Capital: TPG Rise Climate And ADQ To Invest $1B In Indian Group Tatas’ EV Unit

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ADQ, Abu Dhabi’s state holding company, and TPG’s Rise Climate Fund will get a stake between 11 – 15% in the EV venture.

Tata Motors (NSE: TATAMOTORS), the automobile company of the Tatas, the Indian salt-to-airlines business conglomerate, will receive an investment of approximately $1 billion from TPG’s Rise Climate Fund and Abu Dhabi state holding company ADQ in a new EV entity. Tata Motors will invest over $2 billion in the unit. (Reuters)

Tata Motors also owns the British luxury brand Jaguar Land Rover. In EVs, it appears to have already scored a lead in the Indian auto market with its electric SUV Nexon and Tigor compact EV.

Tatas Motors EV plans

However, currently, EVs make up less than 1% of total Indian car sales, against a national target of 30% by 2030.

By 2025, Tata plans to have 10 more electric models by 2025. The group companies of Tata Power (NSE: TATAPOWER), Tata Chemicals (NSE: TATACHEM), and Tata Autocomp would facilitate the creation of an ecosystem for EVs, according to Shailesh Chandra, head of Tata Motors’ passenger vehicles business.

Chandra told reporters that the company was looking forward to working with investors focused on a “carbon-free world.”

Investment by TPG and ADQ in Tata Motors EV Unit

The investment by TPG and ADQ, which has valued the business at $9.1 billion post-money, will flow into a separate “EV-only” arm over the next 18 months, according to the Economic Times.

While the manufacturing will be performed by Tata Motors’ passenger vehicle division for a fee, the new EV unit will have an asset-light business model and hold only technology and IPs.

According to ET, the EV unit will issue compulsorily convertible preference shares (CCPS) which upon conversion over 18 months will give them TPG and ADQ an 11-15% stake. The rest of the capital would be held by Tata Motors.

“We are excited and committed to play a leading role in the Government’s vision to have a 30% electric vehicles penetration rate by 2030,” said Tata Group chairman, N Chandrasekaran.

“There is significant momentum around India’s EV movement, supported by the Government’s vision and policies, as well as growing consumer demand for greener solutions,” said James Coulter, Managing Partner TPG Rise Climate and Founding partner of TPG.

Related Story: TPG’s Impact Investing Arm Pays $200M For Stake In Airtel Africa’s Mobile Money Biz

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