MG Motor India plans to raise funds to develop its Indian electric mobility business.
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NEW DELHI (Reuters) – MG Motor India, which is owned by China’s SAIC Motor, is planning to raise funds to develop its Indian electric mobility business, three sources told Reuters, as Chinese investments faces increased scrutiny by the government. MG Motor India may try to sell stake between 10% and 30% and is looking at options including issue of fresh shares or diluting SAIC’s holding, said one of the sources familiar with the plans, it added. that it may also form a separate entity. Its Electric Vehicle (EV) business in India.
The company is in talks with private equity funds interested in investing in the fast-growing electric vehicle market, two sources said, as countries shift their economies away from fossil fuels. “Everyone is buying into the EV story because it lets investors bet ESG, and MG is trying to position itself as an EV play,” the first source told Reuters.
MG Motor India is yet to decide how much money it plans to raise, which will depend on the valuation of the Indian business and its growth plans, sources said, asking to remain anonymous as talks are private. The first source said it plans to use the money to increase production, introduce new EVs and expand its charging network.
MG Motor India declined to comment on the plans. SAIC also declined to comment, but said it is confident MG Motor India will break even next year. It also said that it already has a wide portfolio of new energy vehicles (NEVs), including electric, hybrid and fuel cell cars, that MG may choose to sell in India.
A representative of SAIC’s public relations department told Reuters: “The local government is concerned about the environment and wants to promote the NEV, so our Indian company is aiming in that direction, even with the NEV at 100.” % have to go.”
Despite government subsidies, overall sales of electric cars in India are less than 1%, mainly due to the high cost of electric vehicles and inadequate charging infrastructure. India’s EV market is dominated by domestic carmaker Tata Motors, which last year raised $1 billion from TPG for its EV business.
Meanwhile, Tesla Inc wants New Delhi to lower the import duty on EVs, which is up to 100%, so it can bring the cars up for sale at an affordable level.
Traffic jam
MG Motor India’s fund-raising plan comes as New Delhi has sought Beijing to limit investments following the 2020 skirmish between troops of the two countries along their disputed Himalayan border.
Investment proposals from China, including SAIC, worth over $2 billion are awaiting the approval of the Indian government.
SAIC said its business has not been affected and that its investment proposal is “being processed”.
MG entered India in 2019 with plans to invest around $650 million. It currently sells four models, including the ZS EV, and has partnered with companies including Tata Power and Fortum, a European energy company, to install charging stations.
Another source said it has hired an Indian law firm and a transaction consultant to raise funds.
A fourth source said delays in raising capital from SAIC, supply chain disruptions and semiconductor shortages have prevented MG Motor India from ramping up production.
Industry data shows that the Chinese automaker sold around 3,500 cars a month on an average in India in 2021, giving it a market share of around 1%.
(Reporting by Aditi Shah and Aditya Kalra in New Delhi; Additional reporting by Brenda Goh in Shanghai; Editing by Alexander Smith)
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