As the nascent sector seems set to take off in a big way, electric two-wheeler manufacturers are turning to global private equity (PE) funds to help fund their expansion plans. Nearly half of this cash is already in advanced negotiation stages for infusion, with two-wheeler electric vehicle (EV) companies and auxiliary units slated to receive around US $1.5-2 billion from PE firms.
They expect private capital inflow into Hero Electric, Ather Energy, Pure EV, Simple Energy, TVS Motor NSE -0.50 percent, Oben, and Ivoomi. The larger firms seek US $100-250 million and the smaller ones seek US $30-60 million each.
Electric two-wheelers already account for 4% of the global market, and two-wheeler EV manufacturers are looking to grow their installed capacities and dealer networks.
Hero Electric has set aside Rs 1,500-2,000 crore to construct two new facilities in the South and West. As a result, it seeks a new round of funding after receiving US $30 million from Gulf Islamic Investments in the United Arab Emirates last year.
Significant Increase in Capital: What the major players have to say:
Naveen Munjal, managing director of Hero Electric:
“The Series B funds were used for capacity expansion, marketing, new product development, network expansion, EV ecosystem development, and research and development. We will seek more financing as and when we require it to continue fueling our growth and expansion goals.”
Suhas Rajkumar, founder, and CEO of Simple Energy:
At startups, fundraising is a never-ending process. In the future quarters, we intend to raise finances. We’re in talks with private equity firms and major global fund houses for a US $100 million Series A transaction. We want to wrap up these rounds in the coming months.
We’ve done several roadshows for two-wheeler EV startups, indicating a strong desire for growth funding. With the recent crisis in technology companies and rising interest rates in developing nations, the asking valuation multiple has dwindled.”
According to Koushik Bhattacharya, executive director at Avendus Investment Banking:
“Two-wheeler EV sales will reach one million units this fiscal year. As the chip shortage steadily eases, roughly double the quantity from the previous financial year.
Two-wheeler EV startups could quickly raise more than US $1 billion in six to eight months to fund expansion plans and build a technical moat to compete with traditional players.”
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