Mahindra & Mahindra (M&M) is currently undergoing an extensive reorganisation exercise.
It recently,
- Separated out the Passenger EV business
- Sold stake in the renewable business
- Partnered Actis to develop warehousing
Now it has announced separating out the Last Mile Mobility Business and is also raising external funding in it from IFC.
- Last mile mobility business primarily comprises of 3-wheelers and light commercial vehicles.
- With Rs 1,287 cr of revenues, it had contributed 2.24% to M&M’s total revenues in FY 22.
- The reorganisation of this business is happening in two stages; both targeted to be achieved by September 30, 2023
- 1st stage – the said business will get demerged into a new 100% subsidiary of M&M (NewCo)
- 2nd stage – Rs 600 will be invested by IFC in NewCo in the form of CCPS that will allow IFC an equity stake between 9.97%Â to 13.64% in the NewCo. Implied valuation of the NewCo therefore ranges between Rs 4,399 cr to Rs 6,018 cr.
- The rationale of the transaction is mentioned to be a dedicated focus towards development of Electric 3-wheeler and Light Commercial Vehicle business in partnership with an institution like IFC, which is focused towards sustainability.
Is it exciting?
I have no idea, how to factor in this development in my analysis. Afterall, currently at about 2%, it is a small business in M&M’s overall scale. How it will unfold in future – only the time will tell.
M&M seems to be trying to make the most (like Tata Motors) towards the current excitement around the EVs.
Merger and demergers – they can anyways be argued/ defended either ways.
M&M has received 1st tranche of Rs 300 cr (out of Rs 600 cr) from IFC
https://www.bseindia.com/xml-data/corpfiling/AttachLive/b73aa60b-2490-4e15-9df0-3229f219797c.pdf