India’s NIIF joins $128m round for Ather Energy
India’s National Investment & Infrastructure Fund (NIIFL) has participated in a USD 128m funding round for Ather Energy, a leading domestic manufacturer of two-wheel electric vehicles (EV).
The investment was made under NIIF’s Strategic Opportunities Fund, a private equity vehicle that makes growth and development stage commitments to companies of strategic importance to the Indian economy. The strategy is led by Paddy Sinha, ex-managing partner of Tata Opportunities Fund.
The only other disclosed investor was Hero MotoCorp, India’s largest manufacturer of conventional two-wheelers. Hero MotoCorp contributed USD 19m to a USD 51m round in 2019 by converting previously acquired debt instruments into equity. That round was led by Sachin Bansal, co-founder of Indian e-commerce giant Flipkart
Sachin Bansal and Medall Healthcare provided USD 1m in angel funding in 2014. Tiger Global Management invested USD 12m in 2015 and then Hero MotoCorp contributed USD 31m a year later. Binny Bansal, Flipkart’s other co-founder, is also a backer of the company, according to a statement.
This is NIIFL’s first direct investment in the manufacturing sector and in electric mobility. Both are areas of national importance given India’s green economy and decarbonisation goals. It is the fourth investment by the Strategic Opportunities Fund, following commitments to non-banking finance companies Aseem Infrastructure Finance and NIIF IFL and to hospital chain Manipal Hospitals.
The funding will go towards expanding manufacturing facilities and investments in R&D, charging infrastructure, and retail network development. For NIIFL, the broader goal is to help mainstream the two-wheeler EV space in India and support first generation local entrepreneurs.
Ather was founded in 2013 by India Institute of Technology Madras alumni Tarun Mehta and Swapnil Jain. The company launched its first smart electric scooter, the Ather 450, in 2018 and followed up with a new flagship offering, the Ather 450X, in 2020. There are now more than 250 two-wheeler EV designs, trademarks, and patents, while trademark filings have been made in over 20 countries.
Ather recorded its highest-ever monthly sales in April, delivering 3,779 units to customers. New orders for the Ather 450X are growing 25% quarter-on-quarter. The company has a retail presence in 32 cities with 38 experience centres. There are plans to reach 150 centres across 100 cities by 2023.
In addition, there is a public charging network, known as Ather Grid, comprising more than 310 charging points nationwide. Ather Grid is open standard, so that other brand vehicles can use it as well. Giving competitors a boost is seen as an acceptable trade-off because wider compatibility will encourage commercial partners to install charging stations on their properties.
“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 Sinha.
“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 [intellectual property] 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.”
Other players in India’s two-wheeler EV space include Ola Electric, which was established by ride-hailing platform Ola in 2017 and then spun out in 2019. A manufacturing partnership with Mahindra & Mahindra started at the same time.
Falcon Edge Capital led a USD 200m round for Ola Electric last October at a valuation of USD 3bn. SoftBank Vision Fund, Warburg Pincus, and Temasek Holdings are also investors. A USD 500m commitment from Warburg Pincus and Temasek in July 2021 took out positions held by Tiger Global and Matrix Partners India.
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