Ola Electric is targeting an Initial Public Offering at a valuation of USD 4.5 Billion which is below its last private funding round. This is a steep fall from $5.4 billion at its peak after the company, which develops a mobility-to-energy technology platform for a range of services, raised $140 million in a funding round led by Singapore based Temasek Holdings.
Significant IPO in the Tech Sector
The offering could be one of the most extensive new-economy public offerings this year, with the qualifying profit that would turn around the public debuts of the tech-driven companies. Other major enterprises getting set for their IPOs this year include e-commerce firm FirstCry and food delivery giant Swiggy, which made a confidential filing of its draft papers with the market regulator.
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Fundraising and Valuation Adjustments
Bhavish Aggarwal-led Ola Electric would use the initial public offering to raise INR 5,500 crore of fresh capital, accompanied by the offer-for-sale component. The $4.5 billion valuation was in line with feedback from bankers and investors during the roadshows being conducted by the company. The company initially looked to be valued at $6-7 billion but has greatly tempered its price expectations. As per its filing of a draft red herring prospectus in December, the company has proposed an OFS of 95.2 million shares.
Competitive Market Landscape
Ola Electric is now gearing up for an IPO with a backdrop of intense competition from Bajaj Auto and TVS Motors, which have tightened the grip. Data emerged from the central government portal Vahan, that Ola’s market share went down to 35% from its peak of 50% in the first half of July. Ather Energy, based in Bengaluru, has launched its competitive models in the performance scooters category with launches against Ola’s S1 range.
Cost-Cutting and Layoffs
Ola Electric, meanwhile, was reportedly similarly engaged in cost-cutting measures and job decisions that affected as many as 600-800 people pulled from its workforce, reported on June 3, as part of a general business restructuring to ready itself for becoming a public company ahead of IPO.
For instance, CEO Bhavish Aggarwal announced his plans to invest $100 million in the construction of a Gigafactory for the mass production of lithium-ion battery cells, with an aspiration for these locally produced cells to be utilized in its scooters by the coming year.
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Financial Backing and Debt Financing
Last October, Ola Electric drew $240 million in debt from the State Bank of India to support its manufacturing operations in Tamil Nadu. The firm, founded in 2017, has raised $1 billion since inception. Investors divesting part of their stakes in the upcoming IPO include SoftBank Vision Fund, Tiger Global, Alpha Wave Global, Matrix Partners India, and Temasek. At $4 billion in valuation, Bhavish Aggarwal could raise about $52 million from the share sale.
About the Author
Akshita Siddhapura is a Business Analytics student at SCMS-B, passionate about finance and research. She has a keen interest in financial analysis and strategic growth, showing a strong commitment to business and finance.
