Hero MotoCorp, the world's top two-wheeler maker, and Singapore sovereign fund GIC are investing $108 million in Ather Energy, a promising electric vehicle startup in India whose fast-growing fortune had to hit the brakes after a local policy change.
Hero MotoCorp, which already owns a 33.1% stake in the Bengaluru-headquartered Ather Energy, disclosed (PDF) in a stock exchange filing that its board of directors had approved a fresh investment of up to $66.5 million in the rights issue of Ather Energy.
Prior to the new investment, Ather Energy has raised $336 million over the years from investors including Tiger Global, Flipkart founders Sachin Bansal and Binny Bansal, and India's quasi-sovereign fund NIIF, according to Tracxn. It was valued at $739 million in a round last year.
Ather Energy, which was on track to hit $1 billion in revenue by December this year, recently hit a roadblock after the Ministry of Heavy Industries cut the subsidy it offers for two-wheelers, dealing a blow to Ather, that, like many other EVs, has been a huge beneficiary of state and federal subsidies in recent years.
Prior to the policy change, Ather was in talks to close a round of about $250 million at a valuation of over $1 billion. Binny Bansal, an investor in Ather, in fact, told a podcast's audience that Ather had become a unicorn. He did not respond to a request for comment.
How Ather Energy will be valued in the rights issue hasn't been determined yet, Hero MotoCorp suggested, but added that its stake will increase in the startup. Ather Energy had a turnover of $218.3 million in the financial year ending March this year, according to Hero.
Two-wheelers are leading the charge for electrification in India, as the costliness of battery-powered cars remains prohibitive for many consumers. By transitioning over 70% of India's total vehicles, which are two-wheelers, to greener alternatives, the South Asian nation can address its air pollution issues. Consultancy firm Arthur D. Little projects that by 2030, electric vehicles will constitute roughly 30% of all vehicle sales in India.
Hero MotoCorp's fresh investment in Ather comes at a time when the world's largest manufacturer of motorcycles and scooters is increasingly trying to expand its electric vehicle portfolio. Last year, Hero MotoCorp launched its first electric vehicle.
The story was updated on September 6 to add information about GIC's participation.