Abdul Latif Jameel to invest $150 mn in Greaves Cotton's EV arm; stk up 14%

Abdul Latif Jameel will make an initial investment of Rs 1,160 crore for 35.8 per cent stake on a fully diluted basis in Greaves Electric Mobility

Shares of Greaves Cotton surged 14 per cent to Rs 183.90 on the BSE in Thursday's intra-day trade after the company announceed strategic investment by Abdul Latif Jameel in its electric vehicle (EV) arm, Greaves Electric Mobility (GEM).

At 09:30 AM; Greaves Cotton was trading 8 per cent higher at Rs 174 on the BSE, as compared to 0.01 per cent decline in the S&P BSE Sensex. The counter saw huge trading volumes with a combined 4.3 million equity shares having changed hands on the NSE and BSE in the first 15 minutes of trade. The stock had hit a 52-week high of Rs 258.85 on January 21, 2022.

Abdul Latif Jameel will make an initial investment of Rs 1,160 crore ($150 million) for 35.8 per cent stake on a fully diluted basis in GEM. Abdul Latif Jameel is an independent, family-owned, diversified global investor and operator. The Jameel Family, that owns Abdul Latif Jameel, is also early-stage investor and the third-largest shareholder of US electric vehicle manufacturer Rivian.

GEM has a strong presence in both electric 2-wheelers and electric 3-wheelers segments. Under electric 2-wheelers, Ampere is a fast growing e-scooter brand in the country with a strong presence in both B2C and B2B segments while Bestway with ELE brand (e-rickshaw) and MRL Auto with Teja brand (e-autos) are the other two fast growing businesses in the electric 3-wheelers segment.

"The proceeds from this investment will be used to develop new products, associated technologies, brand awareness, aiming to transform the Company into a leading global EV manufacturer. The investment aims to support GEM as it transitions into the next phase of growth," the company said in an exchange filing.

Greaves Cotton, GEM and Abdul Latif Jameel International DMCC (Investor) have executed a share subscription agreement and a shareholders' agreement on June 02,2022  for a proposed investment by the Investor in GEM of INR equivalent of $150 million for subscription by the investor to 6.83 million equity shares of GEM to be issued and allotted to the Investor on a preferential allotment through private placement basis resulting in a shareholding of 35.80 per cent on a fully diluted basis in GEM for the Investor, the company said.

In terms of the Agreements, GEM shall also have a right (but not an obligation) to require the Investor to make further investments (in one or more tranches) into GEM of up to $70 million by way of a primary subscription within a period of 12 months from the consummation of the Proposed Investment, it added.