Shares of Greaves Cotton rose for the second consecutive session on the BSE in early deals on Friday after the company announced an investment by Saudi Arabian firm Abdul Latif Jameel International in the firm’s electric vehicle (EV) arm, Greaves Electric Mobility (GEM). The boom continued.
Greaves Electric Mobility (GeM), a 100% subsidiary of greaves cotton (GRV) announced a strategic investment by Abdul Latif Jameel, an independent, family-owned, diversified global investor and operator. Initial investment $150 million ( 11.6 bn) Valuation of the company, for 35.8% stake in GEM 32.4 billion GEM has the option to withdraw an additional $70 million investment within 12 months.
“The announcement is quite positive as it provides GEM cash cushion to invest in all business operations EV space. However, valuations of the EV business are lower than we expected. 181.
Strong traction in e-mobility, reviving traditional business and a sound balance sheet augur well for GRV to focus on rapid ramp-up and achieve first-mover advantage in EVs.
The note said the infusion of capital into the e-mobility business should prompt the management to take aggressive steps to grow its network and invest in R&D along with brand building.
The initial investment will be $150 million ( 1,160 crore for a 35.8% stake in Greaves Electric Mobility on a fully diluted basis). The post money equity value for the EV subsidiary will be $419 million ( 3,238 crore).
The proceeds from this investment will be used to develop new products, associated technologies, brand awareness, with an aim to transform the company into a leading global EV manufacturer.
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