International Finance Corporation (IFC), the World Bank Group’s private-sector investment arm, will invest Rs 600 crore ($72.6 million) in automaker Mahindra & Mahindra’s (M&M) new unit that will make electric three-wheelers and small commercial vehicles.
The deal values M&M’s last-mile mobility unit, or NewCo, at Rs 6,020 crore, the company said in a statement.
This marks IFC’s first investment in an EV manufacturer in the country and the first in electric three-wheelers globally. IFC will own between 9.97% to 13.64% in NewCo.
IFC’s investment comes nine months M&M raised $250 million from British International Investment for a new unit that will make four-wheeled electric passenger vehicles. M&M’s local rival Tata Motors and SoftBank-backed Ola Electric are also ramping up their EV business. Tata Motors, the owner of Jaguar and Land Rover luxury cars, raised $1 billion from private equity firm TPG and Abu Dhabi sovereign wealth fund ADQ in 2021.
“With transport being the fastest-growing contributor to climate change, it is no longer a question of whether electric vehicles should be adopted at scale, but rather how quickly,” said Hector Gomez Ang, IFC’s Regional Director for South Asia.
“India is the largest three-wheeler market globally, and this investment marks a significant step towards scaled domestic production of electric vehicles catering to this segment, as well as small commercial vehicles,”
Mahindra said that, ahead of IFC's investment, it will transfer its electric three-wheeler and small commercial vehicle business to NewCo. The NewCo will include Mahindra’s three-wheeler brands like Alfa, Treo, Zor and the Jeeto small commercial vehicle.
The company also said it has so far invested Rs 850 crore in the last-mile mobility business. With annual revenue of Rs 1,287 crore, the business constitutes 2.24% of the total revenue from operations of M&M.
