The Competition Commission of India (CCI) has approved the National Investment and Infrastructure Fund’s (NIIF) proposal to acquire additional stakes in Ather Energy, an electric scooter manufacturer. The acquisition, facilitated through the green channel route, involves the India-Japan Fund (IJF) acquiring Series G Compulsorily Convertible Preference Shares of Ather. The deal marks a significant step in IJF's mission to promote environmental sustainability and low-carbon strategies in India, while enhancing Japanese investment. Despite Ather's growing valuation, its financial performance for fiscal 2024 shows widening losses. Below is a breakdown of the key points surrounding this development:

NIIF's India-Japan Fund to Acquire Additional Stake in Ather Energy

Competition Commission of India Clears the Deal
The CCI has granted approval for the National Investment and Infrastructure Fund (NIIF) to increase its stake in Ather Energy through the India-Japan Fund (IJF). The acquisition, approved via the green channel route, entails the purchase of Series G Compulsorily Convertible Preference Shares. This method ensures that the deal, which does not pose a threat to market competition, moves forward swiftly.

Focus on Environmental Sustainability and Low-Carbon Strategies

India-Japan Fund's Investment Goals
The India-Japan Fund, a SEBI-registered alternative investment fund, is focused on promoting environmental sustainability and low-carbon emission strategies within India. The fund also aims to foster increased investments from Japanese companies in India, furthering the economic ties between the two nations. This transaction enhances the fund's efforts in developing the market for electric two-wheelers and advancing clean mobility solutions in India.

Impact of the Green Channel Approval

Green Channel Route Ensures Swift Clearance
The green channel mechanism is a regulatory fast-track for transactions that are not expected to raise competition concerns. In this case, the CCI determined that there were no significant overlaps—horizontal, vertical, or complementary—between Ather Energy and NIIF, which would adversely affect competition in the market. As a result, the transaction was automatically approved without further scrutiny.

Ather Energy: From Funding to Unicorn Status

Ather Becomes a Unicorn After Recent Funding
In August 2023, Ather Energy officially became a unicorn following a Rs 600 crore ($71 million) funding round led by its existing investor, NIIF. This development makes Ather the fourth unicorn in India this year and the second in the mobility space, showcasing the growing interest in electric mobility solutions. NIIF first invested in Ather in May 2022, and this additional funding solidifies Ather's standing in the market.

Financial Performance: Widening Losses Amidst Steady Revenues

Ather's Losses Increase in FY24
Despite its unicorn status, Ather Energy has seen a sharp increase in its financial losses. For fiscal 2024, Ather’s loss widened by 22%, reaching Rs 1,059 crore, up from Rs 864 crore in FY23. In contrast, the company’s revenue remained flat, reporting Rs 1,789 crore in FY24 compared to Rs 1,783 crore the previous year. The widening gap between revenue and losses indicates operational challenges, even as the electric scooter maker continues to expand.

Market Competition and Plans to Go Public

Ather Competes in a Dynamic Market
Ather Energy competes with major players like Ola Electric Mobility, TVS, and Bajaj in the fast-growing electric scooter segment. Despite its rising market valuation, the company is facing stiff competition from established brands. In June 2024, Ather converted itself into a public limited company, a precursor to its planned initial public offering (IPO), which could potentially attract further investment and improve its financial standing.