Sajjan Jindal finalize negotiations for the terms of partnership with SAIC

5 Oct 2023 , 12:44 PM

According to sources cited by the Economic Times, Sajjan Jindal of JSW Group and SAIC Motor Corporation have agreed on the parameters of an arrangement with MG Motor India. SAIC, based in China, wholly owns the subsidiary Morris Garages.

A official declaration is anticipated around Diwali, according to the article, and legal paperwork is in progress. According to agreements, the new alliance intends to introduce electric vehicles under its brand name by January 2024. It further said that the deal would increase MG Motor India’s valuation to close to $1 billion.

According to the article, in the first phase, SAIC will control 51% of MG Motor India, Jindal will own 32 to 35% of the company, employees and dealers will own 6%, and an unnamed local financial institution will own 6-7%.

To receive all tax benefits, accumulated losses will be written down against SAIC’s equity, and a plan for a change of control is in the works. Once losses are eliminated, the strategy is to have SAIC launch an offer for sale (OFS) to progressively sell off 38–40% of its stock, with Jindal increasing his interest to 49–51% and employee dealers to 8–9%.

Along with the Astor, Hector, and Gloster, MG Motor offers a variety of models, including the electric Comet and ZS cars. Even though the MG brand is owned by a Chinese firm, MG Motor launched in 2019 with the intention of highlighting its British heritage by using actor Benedict Cumberbatch as a brand ambassador.

The first mention of Jindal’s interest in MG came in June 2023. According to sources, the planned proposal, which the Indian government is said to have authorized, intends to ensure that Indian firms own at least 51% of the equity, with the Chinese side becoming a minority partner holding a maximum of 49%.

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