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Ather Energy raises $128 million funding led by India's sovereign wealth fund, Hero MotoCorp

This will be the first direct investment by the country's sovereign wealth fund in the manufacturing sector and in electric mobility

May 12, 2022 / 03:00 PM IST
Ather co-founders Swapnil Jain (L) and Tarun Mehta (R)

Ather co-founders Swapnil Jain (L) and Tarun Mehta (R)

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Electric two-wheeler maker Ather Energy on May 12 announced that it has raised $128 million funding, led by India's sovereign wealth fund National Investment and Infrastructure Fund Limited's (NIIFL) Strategic Opportunities Fund (SOF), and Hero MotoCorp among others.

This will be NIIFL's first direct investment in the manufacturing sector and in electric mobility. The investment will enable NIIFL to play a role in mainstreaming the electric two-wheeler sector in India at an early stage of development and support first generation domestic entrepreneurs in building a new product with a high level of indigenisation, a company statement said.

"Aligned to India's green transition mission, the electric two-wheeler industry is expected to grow significantly in the coming years. Ather Energy has indigenously designed and developed products with a high degree of domestic sourcing of components and adaptability to Indian conditions" said Padmanabh Sinha, Executive Director & Chief Investment Officer - NIIFL.

"We are excited to partner with Ather Energy’s founders and management team who have developed deep expertise in the industry, developed a robust IP portfolio, and built strong manufacturing and distribution capabilities. We are also impressed with Ather Energy’s partnerships for component manufacturing, charging infrastructure and customer financing," Sinha added.

With this investment, the Bengaluru-based company has raised over $230 million financing to date. It also counts Tiger Global and Flipkart cofounder Sachin Bansal among its investors.


This funding, however, comes at a time when the electric vehicle sector is witnessing a sales boom in India but has also recently come under regulatory scrutiny over the recent spate of battery-related fires in vehicles from companies such as Ola Electric, Okinawa Scooters, PureEV and Jitendra Electric Vehicles, casting a shadow over the prospects of a nascent but fast-growing industry.

The company plans to use the funds raised to expand its manufacturing facilities, invest in research and development, charging infrastructure and to grow its retail network.

"The switch to electric is inevitable and FY 22’ was the turning point for electric two-wheeler adoption in India. We are super excited to have NIIF come on board as an investor. They have been at the forefront of the country’s green transition through their investments and initiatives, and we look forward to our association" Ather Energy CEO Tarun Mehta said.

Set up in February 2015, NIIF has over $4.3 billion assets under management across three funds -- Strategic Opportunities Fund, Master Fund, and Fund of Funds.

Strategic Opportunities Fund, through which NIIFL picks up direct stakes in companies, had previously backed healthcare chain Manipal Hospitals and infrastructure financing NBFCs Aseem Infrastructure Finance and NIIF Infrastructure Finance Ltd (NIIF IFL).

Hero Motocorp, which is already a significant shareholder in the startup, had said in January 2022 that its board had approved an investment of up to Rs 420 crore through one or more tranches. Hero MotoCorp's shareholding in Ather Energy stood at 34.8% prior to this investment.

Founded in 2013 by Mehta and Swapnil Jain, Ather Energy currently offers two scooters - Ather Energy 450 Plus and Ather 450X. In Bengaluru, Ather Energy 450 Plus is available for Rs 1.31 lakh (ex-showroom) while Ather Energy 450X is priced at Rs 1.5 lakh (ex-showroom). The prices of these scooters vary in each state depending on the electric vehicle (EV) subsidies provided by them.

The startup has had strong growth in the past year, claiming to have clocked 366 percent year-on-year growth. The electric two-wheeler maker said it clocked its highest ever monthly sales in April 2022 by delivering 3,779 units to customers. However, in terms of volume, it trails players such as Hero Electric and Ola Electric.

In terms of retail sales network, the company currently has 38 experience centres across 32 cities and aims to expand to 150 experience Centres in 100 cities by 2023. It also claims to have a public charging network of more than 310 charging points across the country.

"The current round of investment will help us enhance capacities across the board, bring additional focus on new platforms, expand into new geographies, expand our fast-charging network and double down on the reputation we’ve built for making a product that’s high on quality" Mehta said.

In a recent interview with Moneycontrol, Mehta had said that they saw more orders in the month of March 2022 than they saw in all of 2018 and 2019 put together. That said, he noted that the ongoing semiconductor supply chain crisis has resulted in the company losing "a fair bit of its sales".

The company had also recently hiked prices of its electric scooters by about Rs 5,500 in the country, citing rising input costs as the reason. However, it is not directly raising the prices of its scooters, instead is now charging Rs 5,475 for Ather Dot portable charger which was previously sold at just Re 1.

In November last year, the Bengaluru-based startup had announced plans to ramp up production in its Hosur plant by setting up a second manufacturing facility. The facility is expected to be operational by August 2022 and will expand the firm's capacity to 4-lakh vehicles per year from the current 1.20 lakh units, Ather Energy had previously said.

The Bengaluru-based startup had also said it has committed to invest Rs 650 crore in the next five years to improve operational efficiency and production capacity to meet the exponential surge in demand.

Over the years, Ather Energy says it has built a robust portfolio of more than 250 designs, trademarks and patents and has further made trademark filings in more than 20 countries.

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Vikas SN
first published: May 12, 2022 03:00 pm
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