 "Bhavish Aggarwal, Ola Electric founder")
Bhavish Aggarwal, Ola Electric founder
Ola Electric is likely to value the company at around $4.5 billion for its upcoming initial public offering (IPO), about 16-20 per cent lower than its last funding round when the firm was valued at around $5.5 billion, industry source said.
Ola Electric founder Bhavish Aggarwal had an ambitious target of at least $6 billion for the IPO. But the SoftBank-backed firm has cut the valuation to make the IPO “attractive”.
“The move is to price the IPO attractively for the investors and for them to grow with the company and create long-term wealth,” said a person familiar with the matter.
Ola Electric received approval for its IPO from the Securities and Exchange Board of India (Sebi) on June 20 this year. It is preparing to hit the primary market next month to raise Rs 7,250 crore, according to people familiar with the matter.
Ola Electric declined to comment on this development.
Following the regulator’s nod, Ola Electric is set to become the first Indian electric vehicle company to go public.
Last year in October, Ola Electric announced that it has secured about Rs 3,200 crore in funding as part of its equity and debt round. This funding was obtained from Temasek-led marquee investors and project debt from State Bank of India.
The funding round, which includes equity, has raised the Bengaluru-based firm’s valuation to $5.5 billion, up from its previous valuation of $5 billion, according to sources. However, this valuation is expected to decrease due to the change in the global tech stock valuations.
The funds raised were expected to create an interim event and pave the way for an IPO.
Aggarwal plans to sell up to 47.4 million shares, equivalent to a 3.48 per cent stake in the IPO.
Other selling shareholders include Indus Trust, Alpine Opportunity Fund, DIG Investment, Internet Fund III (Tiger Global), MacRitchie Investments, Matrix Partners, SoftBank Vision Fund, Alpha Wave Ventures, and Tekne Private Ventures.
According to the draft red herring prospectus (DRHP), the proceeds from the fresh issue will be allocated towards capital expenditure (capex), debt repayment, and research and development (R&D).
Of the total capital raised, the firm plans to invest Rs 1,226 crore in capex and allocate Rs 800 crore for debt repayment. Additionally, it intends to spend Rs 1,600 crore on R&D and Rs 350 crore on organic growth initiatives.
Ola Electric makes EVs and core EV components such as battery packs, motors, and vehicle frames at the Futurefactory in Tamil Nadu. It is being expanded to become the largest two-wheeler factory in the world with an annual production capacity of 10 million units.
It has also newly set up a Gigafactory there.
It is the first of its kind for Li-ion cell manufacturing in India, with an initial capacity of 5 gigawatt hours (GWh). It will be further scaled up in phases to 100 GWh at full capacity, according to the sources. The facility is operational and is being expanded.
Ola Electric also has a battery innovation centre (BIC) in Bengaluru.
It is equipped with ‘unique and cutting-edge’ laboratory equipment to cover all aspects of cell-related research and development (R&D).
(With inputs from Reuters)
First Published: Jul 16 2024 | 9:02 PM IST
