Ola Electric, India’s e-scooter maker, plans to raise $734 million in the nation’s largest IPO this year. This move, expected to draw key foreign investors, spotlights soaring trust in India’s financial sector.
Thanks to a stock surge, over 150 Indian firms have already raked in $5 billion from public listings by July, nearly twice the amount from last year, as per the LSEG. This highlights the market’s robust growth and increased global interest.
“Our mission is to really make India a global EV hub,” Ola’s chairman Bhavish Aggarwal told reporters at a press conference in Mumbai, where he posed for photographs sitting on his e-scooters that start retailing at $900.
Backed by SoftBank, Ola Electric has emerged as the leading force in India’s e-scooter market, despite the nation’s relatively nascent but quickly expanding clean vehicle sector. As of June 30, the company boasts a 46% market share, a significant feat considering it scaled back sales targets in the previous year. This underlines Ola Electric’s market dominance and strategic positioning in the burgeoning electric vehicle landscape.
“Tesla is for the West and Ola for the rest,” has become a catchphrase linked to Aggarwal, who is betting big on cleaner vehicles.
Aggarwal stated that Ola is well-equipped with a robust lineup for electric motorbikes. The company’s bold foray into the e-scooter sector has significantly shaken up the market, compelling established players like TVS, Hero MotoCorp, and Bajaj Auto to refocus their strategies.
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Ola’s upcoming entry into the motorcycle arena, which constitutes two-thirds of the total two-wheeler sales in India, promises to escalate competitive tensions in the industry. This move is set to introduce a new level of rivalry as Ola aims to redefine the electric vehicle landscape.
A term sheet for the IPO, which will run from Aug. 1 to Aug. 6, puts a value of $4 billion on the company, which sold its first scooter in 2021.
Ola’s recent valuation of around $4 billion marks a 25% reduction from its September funding round led by Temasek, the Singaporean investment firm, which had then pegged the electric vehicle (EV) maker’s worth at $5.4 billion. This lower valuation is attributed to two main factors: a global tech market downturn and Ola’s strategy to entice investors to its stock offering, as per confidential sources.
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The decreased valuation, the initial public offering (IPO) is reportedly attracting interest from prominent funds including Fidelity, Nomura, and Norges Bank at the $4 billion mark, alongside various Indian mutual funds, Reuters disclosed based on sources who sought confidentiality.
Under the IPO terms, Ola aims to issue fresh shares to generate $657 million, whereas current investors will sell about $77 million worth of their stakes to new investors. In a Financial Express advertisement, the company revealed the share price range of 72 rupees to 76 rupees ($0.86-$0.91) for the IPO. A 7 rupee-per-share discount was also announced for some eligible employees.
The selling of shares will involve Ola’s co-founder Bhavish Aggarwal and leading investors SoftBank and Matrix Partners. It was further indicated that a tenth of the IPO has been set aside for retail investors, with the funds to be channeled into capital expenditure and R&D projects.
Despite reporting losses, Ola’s IPO plans remain on track and are seen as a strategic move to advance the company’s research and product development efforts.
