Home / Auto News / KKR, TPG in talks to invest $300 m in TVS’s EV business

MUMBAI : Private equity giants TPG Capital and KKR & Co. are in talks with TVS Motor Co. Ltd to invest at least $300 million to fund the expansion of its electric vehicle (EV) business, two people with direct knowledge of the matter said.

“There are at least half a dozen-odd investment management firms who have evinced interest in TVS’s EV business. A major portion of the $300 million may be invested by TPG Capital and KKR, who are particularly excited about investing in ESG-compliant and clean energy-driven ventures. TVS may raise $200 million more subsequently," one of the two people said, seeking anonymity.

TVS Motor Co. may raise the money in the September quarter by selling 20-25% of TVS Electric Mobility Ltd, according to the two people cited above.

The money from the PE majors is most likely to be used for acquiring more startups in the EV space and expanding TVS Motor’s partnership with BMW Motorrad for the joint development of new platforms and future technologies, including EVs, the first person said.

Spokespeople from TVS and TPG declined to comment, while an email sent to KKR did not elicit a response till press time.

TVS Motor may also use the proceeds to create electric vehicle and battery manufacturing facilities and services for the vehicles while keeping costs under strict control, the second person said, also declining to be named.

Buoyed by the industry’s prospects and the mandate to invest in clean technologies, private equity companies and venture capital funds are investing vast amounts in EV startups in India. Funding to EV startups recorded an all-time high in 2021 at $444 million across 25 deals.

But it’s not just startups that are benefiting. For instance, the TPG Rise Climate fund bought a 15% stake in the electric vehicle business of Tata Motors for 7,500 crore in October.

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

TVS Motor is looking to enhance EV business revenues, capitalizing on the increasing demand for electric vehicles globally. Its fundraising plan assumes significance against the backdrop of India sharpening its focus on reducing city vehicular pollution and cutting dependence on fossil fuels amid surging fuel prices.

The government, too, has announced several incentives to encourage EV adoption.

Two-wheeler customers are increasingly switching to electric scooters to save on fuel costs and reduce emissions in India’s highly polluted cities.

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

The fundraising trend shows a growing investor appetite for EVs and allied businesses such as battery manufacturing and charging solutions.

TVS had a 19% market share in the high-speed electric scooter segment in FY22.

TVS sold more than 10,000 electric vehicles in FY22, according to the company’s investor presentation. It has also tied up with Tata Power Co. Ltd and Jio-BP to set up EV charging infrastructure.

In the coming months, TVS Motor will focus on offering different products under its iQube brand (an electric scooter) to consumers so that they can access the latest technology and connected commuting experience at an affordable price, according to the people cited earlier.

Electric two-wheelers account for just 4.5% of all two-wheeler registrations. However, many consumers are actively considering EVs as their means to commute.

“The industry has seen a robust growth of around 5.6 times. The growing sensitivity to climate impact and the improved total cost to operation proposition considering rising fuel prices saw accelerated consumer interest in the (EV) category...production-linked incentive (PLI), state subsidy, and other EV-related infrastructure initiatives of the government reinforced consumer faith in the segment," TVS Motor mentioned in its annual report for fiscal 2022.

ABOUT THE AUTHOR

Anirudh Laskar

Anirudh Laskar is a senior editor at Mint, with 17 years of experience. He has reported on significant corporate matters including large mergers and acquisitions, India's emerging e-commerce sector and regulatory issues in the financial services industry. Based out of Mint’s Mumbai bureau, Anirudh has worked with Business Standard and The Telegraph before joining Mint in 2009.
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