India’s Ola Electric is seeking to raise $661.8 million by selling new shares in an initial public offering, the six-year-old Bengaluru-based startup said in drafts filed with the country’s market regulator on Friday.
Initial public offering paperwork follows Ola Electric raising $384 million from Temasek and Indian government-backed lender State Bank of India in a debt-heavy financing round in late October. The startup, which has raised nearly $1 billion over the years, was valued at $5.4 billion in October funding, TechCrunch previously reported. The startup is targeting a valuation of $6.5 billion to $8 billion in the IPO, a person familiar with the matter told TechCrunch.
The startup also plans to sell about 95.2 million shares from existing investors and shareholders, including some from founder Bhavish Aggarwal (pictured above), Alpha Wave Ventures, Tiger Global, Matrix Partners and SoftBank, according to the draft newsletter. Kotak, Citi, Bank of America, Goldman Sachs, Axis, ICICI, SBI and BOB Capital are managing the book for the IPO, according to the prospectus.
Ola Electric plans to use about $150 million of the total proceeds to expand the production capacity of its electric vehicle cell plant to 6.4 gigawatt hours from 5 gigawatt hours, the prospectus said. It is planning a major expansion of EVs into cars, batteries and cells with a major manufacturing hub in India. Aggarwal aims to produce its own two-wheelers, cars and lithium cells.
Participation of Ola Electric. Image Credits: Ola Electric DRHP
Led by Aggarwal1Ola Electric was spun off from giant Ola in 2019. The two companies continue to share a number of resources2 and some Ola investors had asked Aggarwal to set up an equity entity for both the companies and grant them an allotment in the parent company.
Its losses in fiscal 2023 totaled $176 million, according to the filing. The startup listed several risk factors in its report, including whether the government stops incentivizing local electric vehicle manufacturers, as well as the possibility that they will undergo several key administrative changes. “Our employee attrition rate was 42.06% and 47.48% in the seven months ended October 31, 2023 (on an annualized basis) and fiscal 2023, respectively,” Ola Electric said.
However, all said and done, it is noteworthy that Ola Electric, which this year has launched several new low-end versions of its flagship S1 electric scooter model and also an upgraded version, already leads the electric scooter market in India, with around 35% share purchase. Its IPO is the first by a two-wheeler manufacturer in the country in more than 15 years.
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1. Ola Electric tells DRHP:
We are highly dependent on the services and reputation of Bhavish Aggarwal, our founder, chairman and chief executive officer, who has significant influence over our business plan. He is also the Chairman and CEO of ANI Technologies Private Limited and recently founded a new startup, Krutrim SI Designs Private Limited. His involvement with ANI Technologies Private Limited and Krutrim SI Designs Private Limited may reduce the time he can devote to our Company.
2. Ola Electric says:
We have entered into various transactions with ANI Technologies Private Limited (“ANI”) and its subsidiaries, including: (i) the sub-leasing of the corporate office and registered office by ANI; (ii) our agreement with ANI to sell and advertise our EVs on its website and application; (iii) our agreement with Ola Financial Services Private Limited, a subsidiary of ANI, to distribute insurance policies for the our EVs; (iv) services provided by Geospoc Geospatial Services Private Limited, a subsidiary of ANI, which powers the Ola Maps navigation system on the MoveOS platform version 4. and (v) our agreement with Ola Fleet Technologies Private Limited; subsidiary of ANI, to provide packaging, storage and logistics services in connection with the chargers and accessories we sell. If we are unable to continue such transactions with ANI and its affiliates in the future, our business may be adversely affected.
Although we believe that all such transactions have been entered into on an arm’s length basis, we cannot assure you that we would not have been able to obtain more favorable terms had such related party transactions not been entered into. We may enter into transactions with related parties in the future. Although related party transactions that we may enter into after the listing will be subject to the approval of the Audit Committee, the Board of Directors or the Shareholders as required under the Companies Act, 2013 and the SEBI listing regulations, we cannot ensure that our existing agreements and any such future transactions will be in the best interests of our Company and minority shareholders and in compliance with the Listing Regulations of SEBI and individually or in the aggregate will not have an adverse effect on our financial condition and in the results of our work. In addition, any future dealings with our related parties could potentially involve a conflict of interest that could be detrimental to our Company. There can be no assurance that we will be able to deal with such conflicts of interest in the future.
