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Hindujas join SPAC boom with float of $2bn electric bus-maker Switch

·3 min read

Britain's second-richest family is exploring plans to join a wave of "blank cheque" mergers in a move that could see another major UK electric vehicle manufacturer going public in the US.

Sky News has learnt that Ashok Leyland, the Indian-listed group controlled by the Hindujas, is working with bankers on a potential merger of Switch Mobility with a Special Purpose Acquisition Company (SPAC) in New York.

The plans, which are at an early stage, could see Switch Mobility valued at between $1.5bn and $2bn, according to analysts and banking sources.

Insiders said that the Hindujas, whose fortune was estimated by last year's Sunday Times Rich List at £16bn, were also examining a private capital-raising for the electric bus manufacturer.

They cautioned that Switch Mobility's shareholders could opt to raise private capital only and shun the public markets until a later date.

Switch Mobility, which was previously known as Optare, has contracts with bus operators in cities including London and York.

More than 150 of its vehicles are already in service in the UK, and Ashok Leyland has signalled plans for an aggressive expansion of its ambitions in the electric vehicle market.

Switch Mobility is chaired by Andy Palmer, the former chief executive of Aston Martin Lagonda, who joined the board last year.

Based near Leeds, the company's owner is one of the world's three largest bus manufacturers.

The Hindujas have indicated that they are prepared to inject more of their vast fortune into becoming a global leader in the EV sector, which is seeing an explosion in investment and corporate activity.

Dheeraj Hinduja, Ashok Leyland's chairman, said last year that the company, which is majority-owned by Hinduja companies, was looking to bring all of its EV initiatives under the Switch Mobility umbrella.

"This strategy reflects the clear growth opportunities in the global LCV [light commercial vehicle] and bus EV market, which is projected to grow at a compounded annual growth rate of more than 25% and to be worth in the region of $50bn by 2030," he said.

"To capture part of that market, we are considering EV initiatives through Switch that could include financial participation and strategic tie-ups."

Another UK-based electric vehicle producer, Arrival, merged with a blank cheque company in November, underlining investors' appetite for such deals.

Arrival, which was already backed by Hyundai, went public with a valuation of well over $5bn, while Rivian, another start-up, is making a fleet of electric vans for Amazon.

US-listed SPACs have raised tens of billions of dollars since the start of the year alone as they capitalise on opportunities to entice technology companies to the public markets while short-cutting conventional listing processes.

Numerous entrepreneurs, including Sir Richard Branson, have turned to SPACs to find a new wave of deals, fuelling concerns about a valuation bubble in tech stocks and the gargantuan sums of money being handed to the vehicles' founders.

It was unclear this weekend whether Ashok Leyland had formally opened talks with SPACs about a deal.

Bankers at Citi are advising the company on its options.

A spokeswoman for Ashok Leyland declined to comment this weekend on its discussions about a possible SPAC deal.