Tata Motors has begun discussions with sovereign wealth funds and private equity investors such as UAE-based Abu Dhabi Investment Authority (ADIA) and Mubadala Investment Company, Saudi Arabia-headquartered Public Investment Fund (PIF), Singapore's Temasek Holdings as well as KKR and General Atlantic to sell a significant minority stake in its EV division, said several people aware of the ongoing negotiations.
These sources claim that Tata Motors intends to generate up to $1 billion through the share sale and will primarily utilise the money to pay down some of its outstanding debt. When last valued at $9.1 billion, EV arms A little amount of the funds will be invested in the EV business as primary equity. It wants to be valued at around $10.5 billion, which Temasek, KKR, ADIA, and Tata Motors all declined to comment. Tata Motors
has chosen Morgan Stanley to serve as the transaction advisor and was once more looking for finance for its EV business. After receiving $1 billion from TPG Rising Climate and ADQ in a transaction agreed in 2021, the EV firm, which is headquartered under Tata Passenger Electric Mobility Limited (TPEML), will get finance for the second time in its history.
The investors were given compulsory convertible instruments to secure between 11% and 15% stake in the company. The capital from the first round of funding was earmarked for investments in developing technology and manufacturing expertise for EVs. The latest round of fundraise comes at a time when the company is likely to miss its target of becoming a zero net-debt company at a consolidated level by FY24.
In a recent earnings call, the company said that for its standalone business in India, the automaker will meet its zero net-debt target. However, in the case of foreign subsidiary Jaguar land Rover (JLR), it said, net-debt zero targets may not be immediately achievable.
Tata Motors, the largest automaker by revenue in the nation and a manufacturer of commercial, passenger, and electric vehicles, had over Rs 12,400 crore in debt. The total automotive debt of the business, including that of its British affiliate JLR, was 57,500 crore. With the help of its Nexon EV, Tata Motors has managed to take a sizable lead in the Indian market for electric vehicles. Four out of every five electric vehicles sold in the nation in 2022 were produced by Tata Motors. The manufacturer plans to develop a portfolio of 10 EVs under TPEML during the next four years. Together with Tata Power, it intends to establish a charging infrastructure.
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