Utility vehicle major Mahindra and Mahindra on Wednesday announced that it has picked up a majority 55.2 per cent stake in Bangalore-based Reva Electric car company for an undisclosed amount.
M&M will also invest $ 10 million (around Rs 48 crore) in Reva to fund its expansion plans. Reva is at present setting up its second plant with a capacity of 30,000 cars per annum near Bangalore.
Reva is the world's largest electric car company in terms of volumes and is owned by the Maini family and California-based AEV LLC, who are the co-founders of the company.
Post acquisition, the company will be renamed Mahindra Reva Electric Vehicle Company and the board will be reconstituted with 5 members from M&M, 2 from the Maini family and 1 from AEV LLC.
Chetan Maini will be retained on the board and will be the head of strategy and technology in the new firm. Subsequently an independent director will be added to the board.
“We looked at many global electric companies but zeroed in on Reva as we found that no company has done this much work on electric technology for cars,” said Pawan Goenka, president (automotive and farm equipment sector), M&M.
Goenka, who will be the chairman of the new board, said, “This is a long-term game and though the volumes may be very small right now, Reva has the largest number of electric cars on the road. By 2020, I expect global electric car volume to be around 1.5 million and 80,000-100,000 units a year in India.”
For Reva, the deal will give it access to Mahindra's substantial distribution network around the country as also in US and
“In Mahindra we have found a company that not only shares our vision of principled and sustainable growth but one that also has a reputation for good corporate governance,” said Chetan Maini. “Mahindra REVA will be able to scale, innovate and
accelerate and so to deliver better products to more customers in more places.”
Though M&M refused to divulge the value of the deal, Reva is estimated to have an enterprise value of around Rs 500 crore.
The company said it will look to use Reva’s technolgies in its existing products.