BII, the British government’s development finance institution, would have a 4.8% ownership in the business, which will focus on four-wheel passenger EVs.
The Indian EV unit, which has a valuation of $9.1 billion, would be wholly owned by Mahindra.
The total capital infusion for the new unit is expected to be about 80 billion rupees ($1.01 billion) spread out between 2024 and 2027, Mahindra said.
Mahindra said it would work jointly with the British development finance institution to bring other investors in the Indian EV company to match the funding requirement in a phased manner.
“BII’s anchor investment will be key to attracting additional sources of private capital into this exciting venture with Mahindra Group,” chief executive of BII Nick O’Donohoe said.
BII said the deal would contribute towards 2.1 million tonnes of CO2 equivalent emission avoidance and lead to the creation of about 8,000 skilled jobs – a quarter of which are expected to be for women.
“In BII, we have found a like-minded long-term partner who is committed to combating the climate emergency,” Mahindra chief executive Anish Shah said.
“We would expect between 20% and 30% of Mahindra SUVs being electric by 2027,” executive director Rajesh Jejurikar said.
Mahindra said it sold 26,620 SUVs in June 2022, 60% more than in the same month last year.
- Reuters, with additional editing by George Russell