According to reports, Tata Motors is interested in raising $1 billion through equity sale and will use a large percentage of the proceeds to retire a component of its outstanding debt.
Tata Motors has begun talks with sovereign wealth funds and private equity investors about selling a substantial minority stake in its electric vehicle (EV) division. According to the report, the company intends to raise about $1 billion through equity sales. It would use most shares to retire some of its outstanding debt.
Brief Overview
Partners for the stake include the Abu Dhabi Investment Authority (ADIA) and Mubadala Investment Company in the UAE, the Public Investment Fund (PIF) in Saudi Arabia, Singapore’s Temasek Holdings, KKR, and General Atlantic.
Tata Motors plans to invest a small portion of the funds in the EV business as primary equity. It is pursuing a valuation of nearly $10.5 billion, a 15% premium over the previous round, which valued the EV arm at $9.1 billion.
The investors were given mandatory convertible instruments for an 11-15 percent stake in the company. The first round of funding was designated for investments in developing EV technology and manufacturing expertise.
End Note
Earlier in February, the company intended to raise $500-600 million from global investors for the EV business and to be solid in its presence in the EV segment with ten new electric models by March 2026.
In the Indian market, the carmaker dominates the electric vehicle segment, led by its Nexon EV. By 2022, Tata Motors will have produced four of every five electric vehicles sold in India.
