JSW Group Chairman Sajjan Jindal and Shanghai-based SAIC Motor Corp have reportedly concluded extensive negotiations, reaching a final agreement for a significant partnership involving MG Motor India. The potential valuation of MG Motor India is anticipated to reach $1 billion. An official announcement is expected to be made soon, possibly by Diwali.
This new partnership aims to introduce electric vehicles under a fresh framework by January 2024, as reported by The Economic Times. The agreement is planned to be executed in multiple stages, ultimately resulting in MG Motor ceasing to have Chinese ownership.
In the initial phase, a Jindal-owned company will hold a 32-35% stake in MG Motor India, while SAIC will have a 51% stake. An undisclosed Indian financial institution is set to possess 8%, and the remaining 6-7% will be owned collectively by Indian MG dealers and local employees. Any accumulated losses will be offset against SAIC's equity capital.
Subsequently, MG Motor India is set to initiate its IPO through an Offer for Sale (OFS), during which SAIC will divest its shares, reducing Chinese ownership to approximately 38-40%. According to the report, Sajjan Jindal's ownership will gradually increase to 49% and eventually reach 51%.
With Chinese ownership falling below the 49% mark, MG Motor will no longer be classified as a Chinese company. The board and management will also see a predominant Indian representation, as mentioned in the report. Additionally, the company is planning to appoint a new CEO for this venture, along with introducing a fresh brand identity.
The report also stated that MG India MD Rajeev Chaba recently held discussions with the top executives at JSW to finalize the agreement's terms.
As per the report, the fresh partnership will persist in making royalty payments to SAIC until the local company creates its own intellectual property and software.
MG Motor currently holds a 1.26% market share in India's passenger vehicle segment, having sold approximately 170,000 units in the country. In March, the company achieved its highest monthly sales of 6,051 vehicles. The company operates a manufacturing facility in Halol, Gujarat, with an annual production capacity of 120,000 units.
