Sajjan Jindal's firm, SAIC Motor to take over MG Motor India: Report

There will be no JSW Group companies involved in the deal and Jindal will participate through his private company

JSW Group Chairman Sajjan Jindal and China's SAIC Motor Corp have finalised an agreement to invest in MG Motor India, according to a report in The Economic Times. The deal is expected to be announced by the end of this month or by Diwali.

Under the terms of the agreement, a private company owned by Jindal will initially acquire a 32-35 per cent stake in MG Motor India, while SAIC will hold 51 per cent ownership. An Indian financial institution will own an 8 per cent stake in the business of MG Motor India. MG India and its local employees will hold the remaining ownership, the report stated.

 

Notably, no companies from the JSW Group will participate in this transaction. Jindal will invest through his private company and will have the option to increase his stake to 49 per cent initially and up to 51 per cent following the initial public offering (IPO). Subsequently, the Chinese ownership will drop to below 40 per cent.

The report also indicated that the company's losses will be offset against the equity capital of SAIC. After these losses have been nullified, MG Motor India plans to launch its IPO as an offer for sale (OFS), where SAIC will sell its stake.

The strategic alliance aims to introduce electric cars in the Indian market by January 2024.

MG Motor India, however, declined to comment on the development.

"As stated previously, we are evaluating all options to grow our presence in the country and create a win-win situation for all stakeholders while keeping customers’ interests at the core. This would encompass bringing world-class technology, enhancing localisation, and retaining pole position in customer satisfaction for both sales and aftersales. We decline to comment on the query as it is speculative," it said. 

The automaker has been financially constrained, requiring funds to sustain its operations. Since its launch in India in 2018, it has accumulated losses of approximately Rs 1,720 crore.

Owing to these high losses, the company's valuation may be considerably less than what was initially sought by its parent company. Instead of the demanded $8-10 billion valuation, the deal's valuation might only reach around $1 billion, or between Rs 7,000-8,000 crore.

For the financial year ending in 2023, MG Motor India had a 1.26 per cent share in India's passenger vehicle segment.