India's electric two-wheeler maker Ather Energy has secured a fresh capital infusion of 12 billion rupees ($124.70 million) through a preferential issue of shares and convertible warrants, a move that underscores growing investor confidence in the country's EV sector. The company's board approved the fundraising on Wednesday, with existing investors—led by Hero MotoCorp, the India-Japan Fund, and Ather's co-founders—backing the entire round. Main Developments Shares of Ather Energy surged approximately 8% to 1,292 rupees apiece following the announcement. The capital raise will see the issuance of 1.63 million equity shares to the India-Japan Fund at 1,230 rupees each. Hero MotoCorp, Ather's largest shareholder, will invest 9.60 billion rupees through convertible warrants, following its earlier approval on Tuesday to invest up to 10 billion rupees in the company. Ather co-founders Tarun Mehta and Swapnil Jain will each contribute about 200 million rupees through convertible warrants. Post-issue, Hero MotoCorp's stake will increase to 30.68% from 29.48%, while the India-Japan Fund's holding will rise to 6.02% from 5.75%. The co-founders' individual stakes will decrease slightly to 4.85% each from 4.93%. Read also: India Dismisses US Russian Oil Tariff Bill as Trade Talk Hurdle Background Ather Energy is currently the third-largest electric two-wheeler manufacturer in India as of June, according to Vahan data. The company has been scaling operations amid intensifying competition, particularly from Ola Electric, which recently announced a $208.5 million investment in EV and cell technology units. The latest fundraising follows a period of significant activity in the Indian EV market, with electric two-wheeler penetration crossing 10% for the first time in June—a milestone driven by rising fuel prices and supportive government policies. Why It Matters The capital injection comes at a critical juncture for India's EV ecosystem, where companies require substantial funding for product development, battery technology, and manufacturing expansion to stay competitive. With EV penetration still in single digits overall, the market presents significant growth potential, but also demands heavy investment. Ather's ability to secure backing exclusively from existing investors signals strong internal confidence, even as the broader sector faces margin pressures and supply chain challenges. What's Next Ather Energy has not specified how it will deploy the proceeds, but EV makers typically allocate such funds to new product launches, R&D in battery technology, and scaling production capacity. The company's next steps may include expanding its manufacturing footprint or introducing new models to capture a larger share of the growing electric two-wheeler market. Investors will watch for further details on utilization plans in upcoming filings or announcements.