On Friday, December 22, e-scooter manufacturer Ola Electric filed for an IPO, indicating its goal to earn Rs 5,500 crore ($660 million) in basic capital. This is the first attempt at a stock listing by an Indian EV business. In the eagerly awaited offering, current owners, including founder Bhavish Aggarwal, want to sell around 95 million shares.
People engaged in the process estimate that the IPO size is now set at Rs 1,750 crore ($210 million), reflecting a target valuation of more than $8 billion. To put things in perspective, TVS Motors is valued at $11.2 billion, while Hero MotoCorp, the leading two-wheeler maker in India, is valued at $9.4 billion. Early in the upcoming year, Ola Electric’s management is anticipated to start roadshows and meet with investors; following this, the valuation will be finalized. A lot is dependent upon the mood of the market. The firm was valued at $5.4 billion in the private market earlier this year.
With a 37% ownership, Aggarwal stands to gain over $100 million should the firm secure $210 million in secondary investment. A portion of their assets are also being sold by investors including Matrix Partners India, Alpha Wave, Temasek, Tiger Global, and SoftBank Vision Fund. The Arc predicts that a hypothetical $8 billion value would result in a return of nearly 20X for Matrix Partners, 15X for Tiger Global, and 3X for SoftBank Vision Fund.
How is Ola going to spend the funds?
Over the following three years, almost Rs 1,600 crore will be set aside for research and development, and Rs 1,226 crore will cover the capital expenditures for a facility that makes batteries. In addition, loan repayments of Rs 800 crore will be paid off, and an additional Rs 350 crore will be used for expanding retail locations and infrastructure for billing.
Ola Electric has appointed Ananth Narayanan of Mensa Brands, Shradha Sharma, the inventor of YourStory, and Manoj Kohli, a former executive of SoftBank and Airtel, as independent directors. Earlier this month, Ola Electric’s board member and head of SoftBank Vision Fund for India, Sumer Juneja, announced her resignation. SoftBank holds a 22% ownership stake in the firm, making it the largest stakeholder. After Paytm and Policybazaar’s stock listings, company representatives likewise resigned from those boards as a matter of principle.
The ride-hailing giant Ola and the recently established AI firm Krutrim both headed by Aggarwal, and Ola Electric has raised concerns about this in its IPO documents. “He may not be able to devote as much time to our company as he would like due to his involvement with ANI Technologies (Ola) and Krutrim SI Designs,” the detailed report says.
In addition to Aggarwal, other important managerial figures have been identified as corporate secretary Paramendar Tomar and chief financial officer Harish Abichanchani. After joining Ola in 2017, Abichandani rose to the position of group CFO before taking on an advisory capacity in 2021. It was earlier in the month when he was named CFO.
