India-based private equity firm Eversource Capital is in talks to acquire EV ride-hailing company BluSmart.

The deal is valued between 800 crore rupee (US$90 million) to 1,000 crore rupee (US$120 million).

This marks a 60% drop from BluSmart’s previous US$300 million valuation.

The acquisition will include BluSmart’s liabilities, with Eversource planning to address employee salaries and other dues. Operations are expected to resume shortly after the deal closes.

Eversource plans to merge BluSmart with its EV fleet company, Lithium Urban Technologies, and invest an additional US$100 million into the merged entity.

🔗 Source: Inc42

🧠 Food for thought

1️⃣ EV startup downward valuations reflect broader industry pattern

BluSmart’s potential acquisition at a 60% discount from its previous $300 million valuation reflects a trend seen across the electric vehicle startup landscape.

This follows similar trajectories seen with other EV startups that experienced valuation declines. For example, five EV startups that went public via SPACs collectively lost over $40 billion in market value from their peak valuations 1.

The proposed $90-120 million valuation for BluSmart comes despite the company raising approximately $180 million to date, highlighting the growing gap between fundraising totals and exit values in the EV sector.

This devaluation pattern showcases how investor sentiment has shifted from speculative enthusiasm to demanding clear paths to profitability, affecting even promising companies with substantial funding.

2️⃣ Corporate governance failures create cascading effects across related businesses

The BluSmart crisis demonstrates how poor governance at related entities can trigger chain reactions affecting seemingly separate businesses.

SEBI’s investigation revealed that the Jaggi brothers, promoters of both Gensol and BluSmart, allegedly diverted ₹262 crore ($31 million) from funds meant for EV purchases to personal expenses 2, directly impacting BluSmart’s operational capabilities.

The misappropriation of loans intended for electric vehicle procurement created a liquidity crisis that forced Gensol to sell 3,000 EVs, significantly disrupting BluSmart’s ride-hailing operations 3.