IFC to invest Rs 600 cr in new last mile mobility company of M&M
Date: 22 Mar 2023
a bid to scale up electric three-wheelers and small commercial vehicles (SCVs)
that are more affordable, the International Finance Corporation (IFC), a member
of the World Bank Group, is investing Rs
600 crore in a new last mile mobility (LMM) company - a wholly owned subsidiary
of Mahindra & Mahindra that will be newly incorporated (“NewCo”).
game changer for micro entrepreneurs in India, the funding will transform lives
by boosting their income and paving the way for the auto industry’s seamless
shift from fossil fuel to electric vehicles (EVs).
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 Rs 6,020 crores. The Rs 600 crores
investment will result in an ownership of between 9.97% to 13.64% for IFC in 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. Electric vehicles enable vibration and noise free operations, generate
higher earnings for drivers and enable micro entrepreneurship. The business
will further generate employment for women, driving equality and inclusion
while bolstering India’s climate action agenda.
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 be ‘Planet Positive’ by
2040. This also presents a tremendous opportunity for growth for micro and
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,” said Hector Gomez Ang, IFC’s Regional Director for South
Asia. “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.”
transport remains key to India’s growth, it poses the twin challenge of heavy
reliance on oil imports and severe air pollution. Decarbonizing the transport
sector, which contributes about 13 percent of the country’s greenhouse-gas
(GHG) emissions, can help substantially reduce the impacts related to GHG
emissions and other air pollutants. This is vital given that India has
committed to reducing its emissions profile by 45 percent by 2030, and
simultaneously aims to achieve 80 percent EV penetration for two-and three-wheelers,
70 percent for commercial vehicles, and 30 percent for private cars.
Jejurikar, Executive Director and CEO(Auto & Farm Sector), Mahindra &
Mahindra, 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
micro entrepreneurs. 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
this partnership with Mahindra & Mahindra, we aim to leverage private
sector innovation and technology to accelerate the transition to EVs and help
strengthen India’s e-mobility ecosystem,” said Carsten Mueller, IFC’s Regional
Industry Director for Manufacturing, Agribusiness and Services, Asia. “Green
and sustainable transportation will be critical in the fight against climate
change, and EVs provide exciting solutions to reduce greenhouse-gas emissions,
while curbing air and noise pollution and benefiting entrepreneurs and
communities everywhere,” he added.
Co. are legal advisors to Mahindra & Mahindra and Cyril Amarch and Mangaldas
are legal advisors to IFC for the transaction.