Sajjan Jindal set to acquire up to 48% stake in MG Motor India: Report

A privately-owned company belonging to Sajjan Jindal, the chairman of JSW Group, intends to acquire a stake in MG Motor India, a subsidiary of SAIC Motor based in Shanghai. 

As reported by The Economic Times citing sources, the sources clarified that the venture would not involve JSW Steel and JSW Energy, which are the listed companies of the JSW Group.

As per the current understanding, it is anticipated that Jindal will possess approximately 45-48% ownership in MG Motor India, while dealers and Indian employees are likely to hold 5-8%. The remaining share will be held by SAIC, according to multiple sources familiar with the ongoing negotiations. The proposed plan, reportedly approved by the Indian government, aims to ensure that at least 51% of the equity is held by Indian entities, with the Chinese side becoming a minority partner holding a maximum of 49%.

According to a senior government official, “It will become an Indian entity, instead of a Chinese one, with an eventual India listing in the next few years.”

As part of this transition, the top management and board of the company will have a larger share of Indians.

As per the report, ET had reported on June 13 that Chinese mobile phone manufacturers have also been requested to involve Indian equity partners and senior management in their Indian operations.

Sajjan Jindal and his son Parth recently visited China to hold discussions with SAIC leadership regarding the alliance. The negotiations, which have been ongoing for several months, have gained momentum as both parties have reached an agreement on the deal structure. The valuation of MG Motor India is estimated to be around $1.2-1.5 billion ( ₹9,800-12,300 crore), significantly lower than the initial valuation expectation of $8-10 billion, as stated by the aforementioned sources.

With the goal of establishing a formal and binding agreement, legal agreements have been initiated, aiming to be completed within the next three to four months. The intention is to create a new brand identity that reflects the corporate identities of both partners involved.

SAIC has already invested around ₹5,000 crore in India and was prepared to invest a similar amount. However, the proposal has been delayed since 2020 due to strained relations between the two countries caused by border tensions. As a result, MG Motor has relied on external commercial borrowings from its parent company to sustain its operations in India.

MG Motor offers various models such as the Comet and ZS electric vehicles, in addition to the Astor, Hector, and Gloster. Despite being owned by a Chinese company, MG Motor aimed to highlight the British heritage of the MG brand during its launch in 2019, employing actor Benedict Cumberbatch as a brand ambassador.

Despite receiving a positive response for its models, MG Motor India has not increased its volumes and installed capacity to match the demand over the past two years. Annual sales have reached a plateau of approximately 50,000 units, with 48,866 units sold in FY23, reflecting a 21% increase from FY22. In terms of sales volume, India was the fastest-growing region for SAIC in May, with a growth rate of 51%, as reported by the Chinese company.