This move comes in light of SAIC’s difficulties in raising equity and expanding operations due to investment restrictions imposed by New Delhi. This follows their earlier decision to reduce their ownership to 100% and partner with local entities, including billionaire Sajjan Jindal’s JSW Group.
Currently, SAIC holds a 49% stake in JSW MG Motor. The sources indicated that the share sale to JSW will elevate its stake to 45%, making it the primary individual shareholder.
”Negotiations are underway, and JSW aims to finalize the deal within a month. SAIC has consented,” one source shared. The second source added that this deal would enhance JSW’s operational control and oversight of the venture. The sources requested anonymity as they were not authorized to discuss the matter publicly.
SAIC, JSW, and JSW MG Motor have not provided comments on the inquiries.
The sources did not disclose the deal’s value. When JSW Group acquired its initial 35% stake two years ago, the privately held unit was valued at $1.2 billion.
The first source mentioned that SAIC plans to reinvest around 6 billion rupees ($63 million) from the deal proceeds back into JSW MG Motor to facilitate the launch of new vehicles, including extended-range EVs and hybrids, without altering its shareholding.
Discussions between the two companies commenced last year, with JSW proposing to acquire the majority of SAIC’s shares to become the venture’s largest individual stakeholder. Reuters reported that a valuation disagreement halted the deal at that time.
JSW MG Motor, recognized as India’s second-largest EV manufacturer, has announced intentions to invest up to $418 million to introduce new vehicles and more than double its production capacity to 300,000 units annually in the world’s third-largest automobile market.
Though the company has experienced rising sales, primarily driven by the Windsor EV, its losses have been expanding, with competitors such as Mahindra & Mahindra capturing some of its EV market share.
SAIC made its entry into India in 2019 with aspirations to invest over $650 million but has failed to meet this goal due to the investment restrictions placed by the Indian government in 2020.
In contrast, BYD Co, which entered the Indian market in 2021, had plans to invest $1 billion in car manufacturing but is still awaiting approval from New Delhi to invest.
While there have been improvements in the once-strained relations between India and China in recent months, with New Delhi easing restrictions for Chinese investments in sectors like electronics, the automotive sector remains closely monitored.
