IFC to invest ₹600 crore in Mahindra Group’s new last-mile mobility company
World Bank Group’s International Finance Corporation (IFC) will be investing ₹600 crore in a new last-mile mobility company owned by the Mahindra Group. The Indian conglomerate plans to use the investment to scale up electric three-wheelers and small commercial vehicles that are more affordable. The last mile mobility company will be newly incorporated (NewCo) and a wholly-owned subsidiary under Mahindra & Mahindra.
This is IFC’s first investment in the electric mobility sector in India and the first-ever in the electric three-wheeler segment globally. The investment will be in the form of compulsory convertible instruments at a valuation of up to ₹6,020 crore and will result in ownership between 9.97 per cent and 13.64 per cent.
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Mahindra’s new last-mile mobility company will incorporate the brand’s existing electric three-wheelers including the Alfa, Treo and Zor as well as the low-cost four-wheeler Jeeto. The fresh investment from IFC will help scale up the development and manufacturing of new-generation products in this space. This, in turn, will help provide a boost to the micro-entrepreneur segment, particularly helping generate employment for women, according to the company.
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Speaking on the investment, Anish Shah, MD & CEO, Mahindra & Mahindra, said, “We are delighted to have IFC as a partner in our last mile mobility journey. Decarbonising the transport sector is crucial to achieving the climate goals that India has set for herself. IFC, with its focus on sustainability and boosting prosperity, is an ideal partner for us. With the electrification of the last mile mobility business at scale, we will move a step further in our commitment to being ‘Planet Positive’ by 2040. This also presents a tremendous opportunity for growth for micro and women entrepreneurs."
Hector Gomez Ang, IFC’s Regional Director for South Asia, said, “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. 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. By supporting a leading market player, IFC hopes to encourage other large automotive manufacturers to follow suit, driving EV adoption across India and helping the government deliver on its climate targets."
Rajesh Jejurikar, Executive Director and CEO (Auto & Farm Sector), Mahindra & Mahindra, added, "The last mile mobility business presents a tremendous opportunity, both in terms of electrification and growth. Being the market leaders in this segment, we have an opportunity to drive higher EV penetration in this segment and provide a more sustainable as well as profitable option to microentrepreneurs. We are excited about leveraging the World Bank Group’s expertise in the EV sector to create a viable ecosystem with robust environmental and social practices, as well as build knowledge, innovation, and capacity."
The new last-mile mobility company also shows potential in the wake of growing e-commerce businesses and urbanisation in smaller towns and cities. This will create new demand and opportunities for electric two- and three-wheelers as last-mile connectivity solutions. Mahindra also says that the lower dependence on oil imports causing air pollution will also see a reduction with the arrival of electric two- and three-wheelers. At present, the transport sector contributes about 13 per cent to the country’s greenhouse gas emissions.