Mahindra & Mahindra, the Indian automotive group, is one of the two companies vying to buy LDV, the Birmingham-based vanmaker owned by Oleg Deripaska, the Russian billionaire, The Times has learnt.

It has also emerged that a third bid is being assembled by a former executive of one of the big American carmakers.

The fact that a serious automotive company is interested in LDV will encourage supporters of the plant that a rescue could be possible. The Government is resisting giving the business, in which it has invested £25 million, a short-term bridging loan.

The fresh developments in LDV's fight for survival come as Daimler, the German carmaker, received a powerful boost from an Abu Dhabi state investment fund, which is to take a €1.95 billion (£1.83 billion) stake in the business.

Daimler is to increase its share capital by 10 per cent to allow Aabar Investments to buy up 9.1 per cent. The money would be used by Daimler to invest in new technologies, the two groups said. The pair would also work collaboratively.

The British Government established contact with Mahindra & Mahindra and another Asian-based company over the weekend to try to determine their commitment to LDV. The Department for Business said yesterday that further talks were expected this week. It is understood that the third bid is at an early stage as the former automotive executive establishes partners for a deal.

The vanmaker, which has been in Russian ownership since 2006, said a few weeks ago that it could survive for only days. However, although Gaz, LDV's Russian corporate parent, is cutting its British business adrift, sources close to the talks believe that it has enough money to keep going for a little while. The Government is being pressed to provide a bridging loan to see the company through until it secures substantial funding from the European Investment Bank.

The emergence of a third bid will help to fuel enthusiasm that LDV, which employs 850 people directly and thousands more in its supply chain, could have a future. Tony Woodley, joint general secretary of Unite, the union, said: “It is important because of what might materialise that LDV, which has been a victim of the credit crunch, is helped to carry on. I expect the Government to make available the money that is needed.”

It is believed that the Government's reticence is based on fears that LDV does not have an adequate business plan and that it has been loss-making for the past seven years. LDV has emphasised that its programme to produce an all-electric van is evidence that it is leading the type of environmental development that the Government is seeking from the car industry.

SOURCE: Times -- 23 March 2009
Christine Buckley, Industrial Editor