The International Finance Corporation IFC, a member of the World Bank Group, has announced an investment of ₹6 billion (~$72.9 million) in a subsidiary of Mahindra & Mahindra to expand the reach of affordable electric three-wheelers and small commercial vehicles.

IFC’s initial investment in an electric vehicle (EV) manufacturer in India, and the first for electric three-wheelers worldwide, will be via mandatory convertible instruments at a valuation of up to  ₹60.2 billion (~$732 million).

The investment will result in an ownership of between 9.97% to 13.64% for IFC in the new company.

The subsidirary will incorporate the last mile mobility division, which includes three-wheelers (Alfa, Treo, Zor) and four-wheeler SCV (Jeeto).

IFC’s funding will assist in expanding electric mobility in the passenger and cargo segments, particularly in last-mile connectivity, and support the growth and production of innovative products in this area.

The automaker recently announced the approval of its plan to invest ₹100 billion (~$1.2 billion) for an electric vehicle (EV) manufacturing facility in Pune through a subsidiary.

Anish Shah, MD & CEO of Mahindra & Mahindra, said, “We are delighted to have IFC as a partner in our last mile mobility journey. Decarbonizing the transport sector is crucial to achieving the climate goals that India has set for herself. IFC, with its focus on sustainability and boosting prosperity, is an ideal partner for us.”

Hector Gomez Ang, IFC’s Regional Director for South Asia, said, “India is the largest three-wheeler market globally, and this investment marks a significant step towards scaled domestic production of electric vehicles catering to this segment, as well as small commercial vehicles. By supporting a leading market player, IFC hopes to encourage other large automotive manufacturers to follow suit, driving EV adoption across India and helping the government deliver on its climate targets.”

The investment is said to signal confidence in the prospects of electric vehicles in India, improve connectivity and logistics for passengers and goods, create green jobs, and boost the Indian economy.

Khaitan & Co. provided legal advisory services to Mahindra & Mahindra, while Cyril Amarchand Mangaldas served as legal advisor to IFC for this transaction

In December 2022, IFC announced loans of $400 million and $33.8 million to HDFC and HomeFirst to improve access to climate-smart affordable homes in India.