Hero MotoCorp Invests Rs 124 Crore in Ather Energy, Strengthens Stake in Electric Scooter Market

In a strategic move to consolidate its position in the burgeoning electric vehicle market, two-wheeler giant Hero MotoCorp has invested Rs 124 crore into Ather Energy. This investment has increased Hero MotoCorp's stake in Ather Energy by an additional 2.2%, cementing its status as the largest shareholder with over 40% ownership.

The latest funding round values Ather Energy at an inferred Rs 5,636 crore, a notable increase from the Rs 4,666 crore valuation during Hero MotoCorp's previous investment of Rs 140 crore in December of last year. This premium valuation highlights Ather's growing prominence and potential in the electric scooter segment. Despite the new funding, Hero MotoCorp has not disclosed the identity of the seller from whom the shares were purchased.

In the regulatory filing, Hero MotoCorp reported Ather Energy's turnover at Rs 1,753 crore for FY24, slightly down from Rs 1,784 crore in FY23. However, details on the net loss for FY24 were not provided. In contrast, Ather's net loss stood at Rs 864 crore in FY23, underscoring the challenges the firm faces as it scales its operations.

This investment follows closely on the heels of Ather Energy securing Rs 286 crore ($34 million) from its founders and Stride Ventures through a combination of debt and equity funding. Ather is now preparing to raise an additional $75-90 million (approximately Rs 750 crore) from new and existing investors. This forthcoming funding round, expected to be led by an existing investor, could potentially value Ather between $850 million and $1 billion, according to reports from April 23.

Significant changes in Ather's investor landscape have also been noted. Flipkart cofounder Sachin Bansal, an early backer of Ather, has sold a substantial portion of his shares to Zerodha cofounder Nikhil Kamath and is considering divesting his remaining stake. Bansal, who initially invested around Rs 400 crore since 2014, held a 10.7% stake in Ather as per Tracxn data. Flipkart's other cofounder, Binny Bansal, maintains a 1% stake in the company.

Ather's recent fundraising activities come after it deferred funding plans last year due to unfavorable market conditions. Nevertheless, the company successfully raised Rs 900 crore in September 2023 through a rights issue from Hero MotoCorp and GIC. Competing with major players like Ola Electric, TVS, and Bajaj, Ather Energy continues to solidify its foothold in the electric scooter market.

On April 6, Ather Energy unveiled its new 'Rizta' scooter range, aimed at the family segment. The company, currently producing 150,000 vehicles annually, plans to increase production to match its total capacity of 450,000 scooters per year following the launch of the Rizta.

Hero MotoCorp's continued investment in Ather Energy underscores its commitment to leading the transition towards sustainable mobility solutions. As the electric vehicle market evolves, Ather Energy, with its innovative offerings and strategic backing, is well-positioned to drive significant growth and transformation in the industry.