Mahindra & Mahindra (M&M) and the British International Investment (BII) have inked a pact to invest Rs 1,925 crore each in a wholly-owned subsidiary of the home-grown auto major to focus on four-wheel passenger electric vehicles.
The Mumbai-based automaker and BII have executed a binding agreement to invest in the new entity -- "EV Co".
According to the pact, BII 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, resulting in 2.75 per cent to 4.76 per cent ownership in the EV Co, M&M said in a regulatory filing.
EV Co will focus on four-wheel (4W) passenger electric vehicles, it added.
The total capital infusion for EV Co is envisaged to be around Rs 8,000 crore/$1 billion between Financial Year 24 and FY 27 for the planned product portfolio, the automaker noted.
M&M and BII will work jointly to bring other like-minded investors in the company to match the funding requirement in a phased manner, it added.
"We are extremely delighted to have BII as a partner in our SUV electric journey.
"In BII, we have found a like-minded long-term partner who is committed to combating the climate emergency," M&M MD & CEO Anish Shah said.
The Mahindra Group aims to be "Planet Positive" by 2040, he noted.
"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," Shan stated.
M&M executive director – auto & farm sectors Rajesh Jejurikar said the company expects 20 to 30 per cent of company SUVs to be electric by 2027.
BII CEO Nick O'Donohoe said its anchor investment will be key to attracting additional sources of private capital into this exciting venture with the Mahindra Group.
"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," he stated.
The company said it expects that the first round of BII's capital investment to be completed not later than June 2023 on fulfilment of conditions precedent and the balance post completion of certain milestones in FY24.
M&M noted that BII's investment is designed to significantly accelerate the availability and adoption of electric vehicles in India and other markets served by the automaker.
EV Co. will significantly leverage the broader manufacturing capabilities, product development, design organisations along with the ecosystem of suppliers, dealers, and financiers of M&M.
The funds will be utilised primarily to create and market electric SUV portfolios with advanced technologies, M&M said.
BII is the new name for the UK's Development Finance Institution which was formerly known as CDC Group.
It invests between £1.5 and £2 billion every year to support the UK Government's Clean Green Initiative.
The company has investments in over 1,300 businesses in emerging economies and total assets of £7.7 billion.