(Yicai) April 8 -- SAIC Motor said the Chinese carmaker’s business in India will receive an INR52.2 billion (USD627 million) investment from local steelmaker JSW Group and others, with the aim of leveraging their resource advantages and boosting the MG brand's market share in the country.

The plan to bring in strategic investors will be done in two phases, Shanghai-based SAIC said late yesterday. JSW Singapore, which JSW set up specially for this deal, will first acquire a 26 percent stake in MG Motor India from SAIC for INR26.5 billion, it noted.

JSW and three other investors will then provide the remaining investment to take part in a private placement of MG Motor India in the second stage, SAIC said.

In recent years, SAIC has been expanding its presence in the Indian auto market, one of the world's fastest growing. It set up MG Motor India in 2017 to operate a local factory and make vehicles under the MG brand, launching the first model in 2019. It sold 62,010 of the cars last year, ranking eighth in the Indian market and second in the new energy vehicle segment.

Following the transaction, SAIC's stake in MG Motor India will fall to 49 percent, with JSW Singapore holding 35 percent, IndoEdge India Fund taking an 8 percent stake, a trust firm formed by dealers holding 3 percent, and staff owning 5 percent via an employee stock ownership plan.

Since the two investors in the dealership trust and the ESOP do not have voting rights, SAIC will remain MG Motor India's actual controller after the deal, Shanghai Securities News reported, citing a relevant person from the company. 

The equity and capital increase investment amount was determined based on MG Motor India's pre-investment valuation of INR76.6 billion, SAIC pointed out.

SAIC announced JSW's planned investment and intention to acquire a 35 percent stake in MG Motor India on Dec. 1. The pair will jointly leverage their resource advantages in the auto, steel, energy, and other sectors to ensure MG Motor India's sustainable development, it noted at the time.

Shares of SAIC [SHA: 600104] ended 0.3 percent down at CNY15.31 (USD2.12) apiece in Shanghai today, after jumping by as much as 2.7 percent shortly after the open.

Editor: Martin Kadiev