Tata Motors Ltd (TML) said that it has reached a binding agreement with TPG Rise Climate under which the latter alongside its co-investor ADQ will invest INR 7,500 crores ($1 billion) in its new passenger electric vehicle (EV) business.

The Indian automotive manufacturer is expected to incorporate a new subsidiary, which has been valued at up to $9.1 billion.

The California-based TPG Rise Climate along with co-investors will invest the amount in convertible instruments to acquire an 11-15% stake in the new passenger EV company of Tata Motors.

According to Tata Motors, the new venture will make use of its existing investments and capacities and will focus all the future investment in electric vehicles, battery EV (BEV) platforms, as well as advanced automotive technologies.

It will also stimulate the development of charging infrastructure and battery technology.

N Chandrasekaran — Chairman of Tata Motors said: “I am delighted to have TPG Rise Climate join us in our journey to create a market-shaping electric passenger mobility business in India. We will continue to proactively invest in exciting products that delights customers while meticulously creating a synergistic ecosystem.

“We are excited and committed to play a leading role in the Government’s vision to have 30% electric vehicles penetration rate by 2030.”

In the next five years, the passenger EV company of Tata Motors will build a portfolio of 10 EVs and in partnership with Tata Power, will catalyze the development of a large-scale charging infrastructure that will help accelerate EV use in India.

It is anticipated that the initial capital infusion round is completed by March 2022 and the entire funds will be infused by the end of next year.

Jim Coulter — Managing Partner of TPG Rise Climate and founding partner of TPG said: “We are excited to partner with Tata Motors on their mission to lead the electrification of passenger mobility in India. There is significant momentum around India’s EV movement, supported by the Government’s vision and policies, as well as growing consumer demand for greener solutions.

“The investment aligns with TPG Rise Climate’s focus on decarbonized transport and builds on TPG’s long history in India.”

Morgan Stanley and JP Morgan are the financial advisors to Tata Motors, while BofA Securities India is representing TPG Rise Climate in the deal.

The legal advisor of the Indian automotive company in the deal is Khaitan & Co, while Shardul Amarchand Mangaldas and Co. and Cleary Gottlieb are legal advisors to TPG Rise.

The investment is conditional on preceding conditions and the usual approvals.

  ADQ, Electric Vehicle, India, Jim Coulter, N Chandrasekaran, Tata Motors, TPG Rise Climate