Greaves Cotton raises significant money in EV subsidiary

Money is being raised by Greaves Electric Mobility (GEM), currently a 100% subsidiary of Greaves Cotton Limited (GCL).

It has got total commitments of $220 mn from Abdul Latif Jameel (ALJ), a family-owned diversified business founded in Saudi Arabia in 1945.

Key points to note –

  • ALJ is a leading distributor of Toyota products for over 65 years. The Jameel Family, who owns ALJ, are also early-stage investors of US EV manufacturer Rivian.
  • $220 mn investment is in two tranches
    • 1st tranche – Initial investment of $150 mn (Rs 1,160 Cr]) for a 35.8% stake in GEM;
    • 2nd tranche – Option with GEM to take additional investment of $70 mn within 12 months of completion of the 1st tanche
  • Post second tranche also, GCL will continue to be the majority shareholder in GEM
  • Post money valuation of GEM is estimated at $419 mn (Rs 3,238 Cr). This is significant, given GCL’s total market cap itself is currently at Rs 3,750 crore. GCL’s main business is 3W diesel engine, where it has a leadership position with a market share of 60-65%. EV is the newly identified opportunity and like most others is also the most spoken about.

Objective of the fund raise is to capitalise on the EV growth opportunity.

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