Hero MotoCorp-backed Ather Energy kickstarts prep for biggest ever fundraise. Read on

Hero MotoCorp-backed Ather Energy is back on the prowl for capital and is gearing up for its biggest ever fundraising round as the leading electric scooter maker is now looking to mop up as much as $200 million to $250 million and take on rivals like Ola Electric, Hero Electric, Okinawa Autotech and TVS Motors, multiple industry sources with knowledge of the matter told Moneycontrol.

The move comes nearly four months after the Bengaluru-based firm announced a $128 mn fundraising round led by the Indian government’s sovereign fund National Infrastructure & Investment Fund ( NIIF) and Hero MotoCorp. Earlier, Hero MotoCorp had announced a fund infusion of $54 mn in January.

“These are early days for the proposed transaction. Volumes are increasing rapidly at Ather Energy and the plan is to raise between $200 mn to $250 mn in lieu of a minority stake in the firm,” said one of the persons cited above.

A second person told Moneycontrol that the fresh funds would help the fast-growing Ather Energy to bolster its production capacity & supply chain capacity and would be invested in research and development and charging infrastructure as well.

Investment bank Avendus Capital had been mandated as an advisor for the fundraise, this person added.

Moneycontrol could not independently verify the valuation being targeted by Ather Energy (which also counts top VC firm Tiger Global Management and Flipkart founders Sachin Bansal and Binny Bansal as investors) for the fresh capital raise.

To be sure, Tarun Mehta, Co-Founder and CEO of Ather Energy did not disclose the firm’s valuation during the last funding round in May but had said back then that the firm had not hit unicorn status (valuation of a $1bn), according to media reports.

A third person familiar with ongoing discussions told Moneycontrol that the deal was likely to be launched by September end or early October. “New investors will be tapped for this round and existing investors can also participate,” the person elaborated.

All three persons above spoke to Moneycontrol on the condition of anonymity.

Ather Energy and Avendus Capital declined to comment in response to an email query from Moneycontrol. Moneycontrol has sent reminders and is awaiting a response from Hero MotoCorp. This article will be updated as soon as we hear from the firm.

Ather Energy senior officials spoke to Moneycontrol in July and outlined the company’s strategy to meet rising consumer demand and tackle cost and component pressures.

In an interview with Reuters in July, Tarun Mehta said the firm plans to ramp up production to 10,000 units a month by the end of the year and would fully utilise its annual output capacity of 400,000 units by the end-2023.

Separately, responding to a query on how the fire incidents of electric two-wheelers of various manufacturers would impact the growth of EVs in India, Mehta told PTI that electric two-wheelers are going mainstream and that the fire incidents would only help manufacturers to focus on quality, thus helping the industry mature.

A QUICK LOOK AT THE ATHER ENERGY STORY

Ather Energy was founded in 2013 by IIT Madras alumni, Tarun Mehta, and Swapnil Jain. In 2018, it launched Ather 450, followed by a new flagship offering Ather 450X in 2020. The firm has built a portfolio of more than 250 designs, trademarks and patents and has further made trademark filings in more than 20 countries. Ather has also installed a comprehensive public charging network, Ather Grid, designed and built in India.

With 310+ charging points across India, Ather Grid is one of the country’s largest fast-charging networks for electric scooters. Ather Energy currently operates in 32 cities including Bengaluru, Chennai, Delhi, Hyderabad, Pune, Jaipur, Kochi, Ahmedabad, Mumbai, Mysore, Guwahati, and Hubli.

FUNDRAISING FRENZY IN THE EV SEGMENT

Ather Energy’s peers have also embarked on fundraising exercises. On June 8, Moneycontrol was the first to report that South-based two-wheeler major TVS Motor Company ( which manufactures a battery-powered scooter iQube ) had kick-started a process to raise around $300 million to $350 million for its carved-out electric mobility business.

On December 4, Moneycontrol was also the first to report that Hero Electric was looking to tap private equity funds and raise capital.

In October 2021, Tata Motors had galvanised the EV segment when it announced a $1 billion fund infusion in its electric vehicle (EV) business by a consortium of TPG Rise Climate and Abu Dhabi’s ADQ.

Recently, Greaves Cotton announced a total strategic investment of $220 million for Greaves Electric Mobility by Abdul Latif Jameel, an independent, family-owned, Saudi Arabian player.

The company claimed that it is one of the largest single tranche growth capital investments in the Indian E2W/E3W sector. The initial investment will be $150 million for a 35.8 percent stake on a fully diluted basis in Greaves Electric Mobility. Post money equity value for the EV subsidiary will be $419 million, the announcement had added.

ESG (environmental, social and governance) bets are currently a hot favourite with global investors. The move by domestic players to create a separate arm for the EV operations comes on the back of the government’s plans to decarbonise the domestic transport sector.

The government intends to have EV sales penetration of 30 percent for private cars, 70 percent for commercial vehicles and 80 percent for two and three-wheelers by 2030.