GEF Capital invests ₹500 cr in e-mobility
- ByStartupStory | January 27, 2023
The e-mobility firms Electra EV and Hero Motors Ltd. have received investments from the private equity fund GEF Capital Partners totaling more than 500 crore.
This is a component of the investor’s plan to increase his or her stake in India’s climate and sustainability potential. With this, GEF has invested eight times over the previous four years.
Independent EV powertrain solutions provider Electra EV is supported by businessman Ratan Tata. Its products include integrated electronics, battery packs, e-traction systems, and end-to-end powertrain solutions. For two- and three-wheelers, four-wheelers, as well as EV applications for farm and off-highway use, it offers solutions. Tata Motors’ Xpres-T and Ace EV cars utilise Electra’s powertrain technologies.
The HMC (Hero Motors Company) Group’s flagship EV-focused car parts business is called Hero Motors. In order to expand its selection of EV components, Hero Motors plans to invest Rs1,500 crore over the next three years. It is India’s top manufacturer of e-bike parts. Both purchases were finished using GEF’s South Asia Growth Fund II, which has a budget of almost $200 million (SAGF II).
The GEF has placed previous wagers in the Indian e-mobility market. The company was one of the first backers of Chetan Maini’s electric vehicle company, Reva.
Raj Pai, one of GEF’s founders and managing partner, said, “We were early investors in India’s first EV platform, Reva. We were one of the initial investors in 2007. That business was well ahead of its time and none of the tailwinds we talk about today existed back then. The policy frameworks we have today were not there, the charging infrastructure wasn’t there. But the company did a fantastic job experimenting with battery technology.”
“The EV space today is a very broad spectrum. In the early stage, you have a lot of new technology innovation coming in, people are experimenting with battery technologies, new chemistry and materials. Then you have the OEMs who manufacture the vehicles. What we are looking at is where we can play with modest amounts of good growth capital to find companies which are at an inflection point,” said Pai.
In India, the EV market recently passed the milestone of selling 1 million units by 2022, accounting for 4.7% of total auto sales. By 2025, internal combustion engine-powered vehicles are expected to be replaced by EVs by a 30% margin, predicts the Society of Manufacturers of Electric Vehicles (SMEV).
According to Pai, GEF Capital invests in three different climate-related areas: climate mitigation, climate adaptation, and circular economy.
“In our definition, there are three aspects of climate investing. One is climate mitigation where you look to reduce carbon emissions. For example EVs; the more you drive an EV, you are helping to mitigate carbon emissions. Second is climate adaptation, which is introducing resiliency into business and the third is circular economy,” he said.
The investment group is concentrating its efforts in a number of industries, including agriculture.
“Agri is an emerging area. We have played agri in different ways. We have a portfolio company which works in hybrid seeds, a very R&D centric company. They introduce a high level of sophistication in hybrid seeds for rice, cotton, tomatoes, millets. They try to introduce features which make the crops more resistant to climate impact,” said Pai.
He noted that the company is experiencing a robust deal flow in the agritech space.
Pai continued, “The fund is also looking into opportunities in the circular economy sector, such as waste management and plastic recycling.
He continued by saying that the company is actively involved in assisting its portfolio companies in developing their net zero strategy as the importance of ESG becomes more prominent in boardrooms.
“Every company today has to demonstrate their pathway to net zero. We have been actively involved with our portfolio companies from fund 2, helping them craft their net zero strategy. That’s an area where we can contribute immensely. We have senior team members who are focused entirely on ESG,” said Pai.
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