Shares of auto major Mahindra and Mahindra (M&M) jumped as much as 5 percent on Friday after the automaker said British International Investment would invest up to Rs 1,925 crore ($250 million) into its new four-wheel passenger electric vehicle (EV) arm.

At 9:21 am, shares of M&M were trading 3.6 percent higher at Rs 1,173.7 on the BSE.

According to an exchange filing, British International Investment 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. This will result in 2.75-4.76 percent ownership for British International Investment in the new EV company.

The total capital infusion for the new EV company is envisaged to be approximately Rs 8,000 crore ($1 billion) between FY24 and FY27 for the planned product portfolio, M&M said.

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The current EV business, Mahindra Electric Mobility, has been growing at a fast pace. In FY22, it sold 17,006 electric vehicles as compared with 5,418 EVs a year ago. Mahindra electric vehicle sales skyrocketed 213 percent year-on-year in FY22.

Currently, M&M is the market leader in electric three-wheelers and has a 73.4 percent market share in the segment as of FY22. In FY22, M&M sold 22,987 electric three-wheelers in India. The automobile company accounts for 8.8 percent of the e-three-wheeler sales in India.

Now the company’s focus is to grow the electric four-wheeler business and it plans to launch eight new electric vehicles in the SUV space by 2027.

M&M and British International Investment will work jointly to bring other like-minded investors into the new EV company to match the funding requirement in a phased manner. The investment is designed to significantly accelerate the availability and adoption of electric vehicles in India and other markets served by M&M, it said.

The investment alongside M&M in the new EV company supports British International Investment's undertaking that at least 30 percent of its total investments will be in climate finance.

The new EV company will significantly leverage the broader manufacturing capabilities, product development, and design organisations along with the ecosystem of suppliers, dealers, and financiers of M&M. The funds will be utilised primarily to create and market a world-class electric SUV portfolio with advanced technologies.

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Anish Shah, MD and CEO, Mahindra & Mahindra, said, "We are extremely delighted to have British International Investment as a partner in our SUV electric journey."

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."

The new four-wheel passenger electric vehicle company will be incorporated as a wholly-owned subsidiary of M&M in India.

Nick O’Donohoe, CEO of British International Investment, commented, "The company's anchor investment will be key to attracting additional sources of private capital into this exciting venture with the Mahindra Group.

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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."

It is expected that the first round of British International Investment's capital investment will be completed not later than June 2023 on fulfilment of conditions precedent and the balance post completion of certain milestones in FY24.

Rajesh Jejurikar, executive director, 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 15 August 2022, followed by a reveal of the electric XUV 400 in September 2022. We would expect between 20 to 30 percent of Mahindra SUVs to be electric by 2027."

Khaitan & Co. are legal advisors to Mahindra. Cyril Amarchand Mangaldas and Cleary Gottlieb are legal advisors to British International Investment for the transaction.

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First Published:Jul 8, 2022 12:00 AM IST