NIIF, the National Investment and Infrastructure Fund, has made headlines recently with its noteworthy acquisition of additional stakes in Ather Energy, the fast-rising electric scooter manufacturer based out of Bengaluru. This development was confirmed when India's competition watchdog, the Competition Commission of India (CCI), approved the proposal for NIIF to increase its shareholding.
Last month, Ather Energy created quite the buzz by making its entry as the fourth unicorn of 2023, achieving this impressive status after securing funding of $71 million (approximately Rs 600 crore) from NIIF. This investment, which took place during their Series G funding round, highlights the growing investor confidence in the electric mobility sector. The first step of NIIF's investment was back in May 2022, signaling their long-term commitment to supporting Ather.
According to the report put out by Business Standard, NIIF through its India-Japan Fund (IJF) will acquire Series G Compulsorily Convertible Preference Shares of Ather Energy. The competition authority stated, "The acquirer (India-Japan Fund) proposes to acquire certain Series G Compulsorily Convertible Preference Shares of Ather,” as part of their order announcing the approval.
Interestingly, the acquisition was facilitated through the CCI's 'green channel' route—an expedited regulatory path for transactions not likely to cause significant market competition issues. The CCI concluded there were no substantial overlaps between Ather Energy and NIIF's market functions, meaning the acquisition would not hinder competition. This fast-track approval process is significant for investors who seek efficient operations without facing lengthy bureaucratic delays.
But why is this investment so important? For starters, the India-Japan Fund is committed to promoting environmental sustainability and low-carbon strategies throughout India. Their investment goal is not just to back Ather Energy, but also to increase the influx of Japanese investments to India, thereby strengthening economic ties between the two countries. This move aligns perfectly with the rising global trend toward green technology and sustainable operational strategies.
Despite the soaring valuation and success, Ather Energy has reported some worrying financial metrics. For fiscal year 2024, Ather's losses increased by 22% and are now reported at Rs 1,059 crore, compared to the previous year's Rs 864 crore. On the other hand, their revenue growth has stalled, remaining nearly flat at Rs 1,789 crore this year versus Rs 1,783 crore last year. The widening gulf between increasing losses and stagnated revenue indicates the operational hurdles the company still faces as it expands.
Entering the unicorn club signals not just financial success, but also greater responsibilities for Ather as it enters the competitive electric vehicle marketplace, where it faces stiff competition from established players like Ola Electric and TVS Motor Company. Ather's strategy hinges on enhancing its operational efficiency to attain profitability amid such fierce rivalries.
To navigate the competitive climate, Ather Energy has plans to go public. The company, which formally transitioned to being publicly limited last June, is poised for its initial public offering (IPO) soon, which they hope will bolster their finances and attract even more investments.
This blend of hope and challenge encapsulates the electric vehicle sector. With investments like those from NIIF, the sector appears ripe for breakthrough technologies and innovations. But as Ather Energy advances, also keeping close tabs on its financial health will be pivotal for its long-term sustainability.
The approval for NIIF's additional stakeholding reflects faith not only in Ather Energy's potential but also signals broader investor confidence within India's rapidly growing electric two-wheeler market. Looking forward, it will be fascinating to see how Ather leverages this funding to innovate and address the operational challenges it currently faces.
