In September 2023, Ola Electric had snagged a value of $5.4 billion when it raised $140 million in a round led by Singapore’s Temasek.
The proposed listing will be among the largest new-economy IPOs this year, signalling a revival of public market debuts by technology-first companies. Ecommerce firm FirstCry is gearing up to launch its IPO soon while Swiggy has confidentially filed its draft papers with the markets regulator.
The Bhavish Aggarwal-led electric vehicle firm is expected to raise Rs 5,500 crore in fresh capital via the IPO, apart from the offer-for-sale (OFS) component. The current discussions on the $4 billion valuation are based on conversations with bankers and investors during the company’s roadshows, according to sources.
ETtech
More competition“The valuation expectation has undergone readjustment since the EV major first filed its draft IPO papers. The company has agreed to a discount compared to its last round pricing,” a person aware of the matter said.
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Ola Electric was initially aiming for a $6-7 billion valuation but has since tempered its expectations. According to its draft red herring prospectus filed in December, the company is facilitating an OFS of 95.2 million shares.“Going forward, the company sees room for growth. It is looking to price the IPO in an attractive manner so those buying shares can make money after the company lists on the bourses,” said a second person close to Ola Electric.
A spokesperson for the company did not respond to ET’s query. ET first broke the news of Ola Electric’s IPO pricing in its online edition on Tuesday evening.
Technology-first ventures have gained visibility on Indian bourses following the high-profile listings of Zomato and Nykaa in 2021. This year, office space sharing firm Awfis, travel-tech company Ixigo and insurtech company Digit have floated successful IPOs so far.
Ola Electric’s plan to hit the market comes amid recent launches from Bajaj Auto and TVS Motors which have challenged the Bengaluru-based company’s market share in the first half of July, according to data from central government portal Vahan.
“At the moment, Ola is trending at around 35% (market) share compared with its peak of around 50%,” another person aware of the matter said. Bengaluru-based Ather Energy, which specialises in the performance scooter segment with its 450 range, launched a new vehicle, Rizta, in April to compete in the family scooter segment dominated by Ola Electric with its S1 range of scooters.
ETtechCutting costs, layoffs
Even as it approaches its IPO, Ola Electric has been cutting costs and laying off staff. It is letting go of around 600-800 employees, as first reported by ET on June 3, along with internal transfers as part of business restructuring. “These moves are nearly complete and in line with the process of being IPO-ready,” one of the persons mentioned above said.
On June 29, CEO Aggarwal said he plans to invest $100 million (about Rs 834 crore) in the first phase of building a Gigafactory to produce lithium-ion battery cells. Ola’s electric scooters will feature the locally produced battery cells as early as next year.
Ola Electric, Aggarwal said at the time, is developing a 4,680 form of battery cells, which is more energy-dense and advanced than the 2170 form of battery cells it currently sources for its electric scooters.
Last October, the EV maker also secured $240 million in debt from State Bank of India to finance operations at its manufacturing unit in Tamil Nadu. In all, it has raised $1 billion since inception in 2017.
Besides Aggarwal (who is selling 47.4 million shares), investors divesting part-stake in the upcoming IPO include SoftBank Vision Fund (23.8 million), Tiger Global (6.4 million), Alpha Wave Global (3.8 million), Matrix Partners India (3.7 million) and Temasek (1.3 million).
At a valuation of $4 billion, Aggarwal could garner around $52 million from the share sale.