Tata Motors to Raise $1 Billion for its Passenger Electric Vehicle Subsidiary

TPG Rise will acquire a stake of between 11% and 15% at an equity valuation of $9 billion


TPG Rise Climate, the climate investing strategy of TPG’s global impact investing platform, and Abu Dhabi Developmental Holding Company (ADQ) have entered into a binding agreement to invest ₹75 billion (~$995.19 million) in a subsidiary to be created by Tata Motors for electric vehicles (EV).

The stake will translate to an equity valuation of up to $9.1 billion.

The first round of capital infusion is expected to be completed by March 22, 2022. The entire funds will be infused by the end of 2022.

The new company aims to create a portfolio of 10 EVs and accelerate the adoption of electric vehicles in the next five years by utilizing a widespread charging infrastructure developed by Tata Power. The new company will leverage all existing investments and capabilities of Tata Motors and channel future investments into EVs, dedicated BEV platforms, advanced automotive technologies, and catalyze investments in charging infrastructure and battery technologies.

A $34 billion company, Tata Motors is a leading global automobile manufacturer of cars, utility vehicles, pick-ups, trucks, and buses, offering an extensive range of integrated, smart, and e-mobility solutions.

TPG Rise Climate pursues climate-related investments focusing on five climate sub-sectors: clean energy, enabling solutions, decarbonized transport, greening industrials, and agriculture and natural solutions.

ADQ’s broad portfolio of major enterprises spans key sectors, including energy and utilities, food and agriculture, healthcare and pharma, and mobility and logistics.

According to N Chandrasekaran, Chairman, Tata Motors, the company will play a leading role in realizing the government’s vision of having a 30% penetration rate for EVs by 2030.

“The investment aligns with TPG Rise Climate’s focus on decarbonized transport and builds on TPG’s long history in India,” said Jim Coulter, Managing Partner, TPG Rise Climate.

Morgan Stanley and JP Morgan are the joint financial advisors to Tata Motors, while BofA Securities represents TPG Rise Climate for this transaction.

Recently, TPG Rise Climate raised $5.4 billion from over 20 companies and global institutional investors for its inaugural fund. The fund proceeds will be utilized for the initiatives in five key areas: clean energy, enabling solutions, decarbonized transport, greening industrials, and agriculture and natural solutions.

TPG’s The Rise Fund had invested  $25 million in distributed solar company Fourth Partner Energy earlier this year.