Ola Electric, a startup based in Bengaluru, India, plans to generate $661.8 million via an initial public offering by selling additional shares. The company, which is six years old, submitted draft documents to the country’s market regulator on Friday.
Ola Electric secured $384 million in a debt-heavy fundraising round in late October, including investments from Temasek and the State Bank of India, a government-backed lender. The paperwork for the initial public offering (IPO) now follows. According to Eltrys, the business, which has accumulated about $1 billion in funding during its existence, was appraised at $5.4 billion during the October fundraising. According to a source familiar with the situation, the business aims to achieve a value of $6.5 billion to $8 billion during its first public offering (IPO).
The business intends to offer around 95.2 million shares for sale, sourced from current investors and stockholders, who include founder Bhavish Aggarwal (depicted above), Alpha Wave Ventures, Tiger Global, Matrix Partners, and SoftBank, as stated in the preliminary prospectus. As stated in the prospectus, Kotak, Citi, Bank of America, Goldman Sachs, Axis, ICICI, SBI, and BOB Capital are managing the IPO’s book.
Ola Electric intends to use about $150 million of the overall funds towards augmenting the production capacity of its electric car cell facility. This expansion aims to increase the capacity from 5 gigawatt hours to 6.4 gigawatt hours, as stated in the prospectus. The company intends to significantly expand its presence in the electric vehicle (EV) market by establishing a substantial production facility in India, focusing on automobiles, batteries, and cells. Aggarwal’s objective is to manufacture the company’s own motorcycles, automobiles, and lithium batteries.
Ola Electric, under the leadership of Aggarwal 1, was established as a separate entity from the ride-hailing company Ola in 2019. The two companies still collaborate on several resources, and some investors in Ola have urged Aggarwal to establish a holding company for both organizations and provide them with a part in the main company.
The paper indicates that the company had losses amounting to $176 million in the fiscal year 2023. The firm outlined other risk concerns in its study, such as the potential discontinuation of government subsidies for local electric car manufacturers and the likelihood of seeing significant management transitions. Ola Electric reported an employee attrition rate of 42.06% for the seven-month period ending on October 31, 2023, when annualized. For the fiscal year 2023, the attrition rate was 47.48%.
However, it is noteworthy that Ola Electric, despite launching many affordable versions of its primary S1 electric scooter model and an improved edition this year, now dominates the Indian EV scooter industry with a substantial market share of over 35%. The IPO of this two-wheeler manufacturer is the first of its kind in the nation in more than 15 years.
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1. Ola Electric states in the Draft Red Herring Prospectus (DRHP):
Our business model is heavily reliant on the skills and reputation of Bhavish Aggarwal, our founder, chairman, and managing director, who wields substantial influence. Additionally, he holds the positions of Chairman and Managing Director of ANI Technologies Private Limited. Furthermore, he has just established a new business called Krutrim SI Designs Private Limited. His association with ANI Technologies Private Limited and Krutrim SI Designs Private Limited can reduce the amount of time he can allocate to our company.
2. Ola Electric states:
We have engaged in various transactions with ANI Technologies Private Limited (“ANI”) and its subsidiaries, including: (i) sub-leasing our Corporate Office and Registered Office from ANI; (ii) collaborating with ANI to sell and advertise our EVs on their website and app; (iii) partnering with Ola Financial Services Private Limited, a subsidiary of ANI, to distribute insurance policies for our EVs; (iv) utilizing the services of Geospoc Geospatial Services Private Limited, a subsidiary of ANI, to power the Ola Maps navigation system on our MoveOS version 4 platform; and (v) entering into an agreement with Ola Fleet Technologies Private Limited, a subsidiary of ANI, to provide packing, warehousing, and logistics services for the chargers and accessories we sell. If we are unable to sustain these transactions with ANI and its subsidiaries in the future, it might have an adverse effect on our business operations.
Although we have handled all these transactions independently, we cannot guarantee that we could not have obtained more advantageous conditions if we had not engaged with linked parties. We are expected to engage in related-party transactions in the future. While any related party transactions that we engage in after our listing will be reviewed and approved by the Audit Committee, Board, or Shareholders, as required by the Companies Act, 2013, and the SEBI Listing Regulations, we cannot guarantee that our current agreements or any future transactions will be beneficial for our company and minority shareholders and in line with the SEBI Listing Regulations. Furthermore, these transactions, either individually or collectively, may have a negative impact on our financial condition and operational results. In addition, any future transactions with our affiliated entities may possibly give rise to conflicts of interest that might harm our company. There is no guarantee that we will be able to resolve these conflicts of interest in the future.
