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The International Finance Corporation (IFC) has announced to invest ₹600 crore in a new last mile mobility (LMM) company ¬ a wholly owned subsidiary of Mahindra & Mahindra that will be newly incorporated (NewCo).
A gamechanger for microentrepreneurs in India, the funding is aimed at transforming the lives of micro entrepreneurs, operating electric three wheelers & small commercial vehicles, by boosting their income and paving the way for the auto industry’s shift from fossil fuel to electric vehicles (EVs).
“IFC’s first investment in an EV manufacturer in the country and the first in electric three-wheelers globally will be in the form of compulsory convertible instruments at a valuation of up to ₹6,020 crore.” IFC and M&M said in a joint statement.
The ₹600 crore investment will result in an ownership of between 9.97% to 13.64% for IFC in the NewCo.
The NewCo will house the last mile mobility division, including three wheelers (Alfa, Treo, Zor) and four-wheeler SCV (Jeeto).
“IFC’s financing will help scale up electric mobility in last mile connectivity - passenger and cargo segments - while enabling the development and manufacturing of new generation products in this space,” the joint statement said.
Anish Shah, MD & CEO, M&M said, “Decarbonizing 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.”
Hector Gomez Ang, IFC’s Regional Director for South Asia said, “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,” he added.
Rajesh Jejurikar, Executive Director and CEO (Auto & Farm Sector), M&M, said, “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.”
