Ola Electric files draft IPO papers, looks to raise Rs 5,500 crore via fresh share sale

Ola Electric has filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (Sebi), becoming the first electric vehicle (EV) startup to go for an IPO. The electric scooter maker is looking to raise up to Rs 5,500 crore through a fresh issue, apart from an offer-for-sale (OFS) component of 95.2 million shares. The company is eyeing a $7-8 billion valuation through the public offering, ET had reported earlier, citing bankers.

The company’s founder and CEO Bhavish Aggarwal will sell up to 47.4 million shares, or around 1.3% stake, via the IPO followed by 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). Promoter entity Indus Trust will sell 4.2 m shares. At a valuation of $7-8 billion, Aggarwal could garner $90-100 million from the sale.

The firm could consider a fundraise via issue of shares worth up to Rs 1,100 crore prior to the filing of the red herring prospectus (RHP), it said in the DRHP document.

Last Valued at $5 Billion

According to information sourced from Tracxn, the company has so far raised almost $1 billion in financing, including debt, and was last valued at $5 billion during a private fundraise.

The two-wheeler EV maker reported revenue from operations of Rs 2,631 crore in the fiscal year ended March 31, against Rs 373 crore in FY22. For the quarter ended June 30, Ola Electric reported operating revenue of Rs 1,243 crore. The company posted a net loss of Rs 1,472 crore in FY23, while for the first quarter of FY24, it reported a net loss of Rs 267 crore.

For the company that started selling scooters in December 2021, FY23 was its first full year of sales. In November, the firm had about 30,000 vehicle registrations, a proxy for scooter sales, according to data from the government portal Vahan. It is currently the biggest player in the electric scooter segment with a 35% market share.

In its DRHP, Ola Electric has said that its employee attrition rate was 47.48% in FY23. As of October 31, the company had 3,733 employees on its rolls. Further, the company also flagged that the involvement of Aggarwal in ride-hailing platform Ola and the newly launched artificial intelligence venture Krutrim AI — both of which are led by him — "may detract from the time that he is able to dedicate" to Ola Electric.

Ola Electric was set up in 2019 after being spun off from ANI Technologies, the parent company of ride-hailing platform Ola. In December, Ola Electric appointed former SoftBank India head Manoj Kohli, Mensa Brands founder Ananth Narayanan and YourStory founder Shradha Sharma as independent directors on its board.

Of the proceeds, Rs 1,226 crore will be used for expanding capacity at the company’s cell manufacturing plant, Ola Gigafactory, to 6.4 GWh from 5 GWh. This investment is expected to be made in FY25 and FY26, the company said.

It will use Rs 1,405 crore to repay loans taken by subsidiary Ola Electric Technology (OET) from Bank of Baroda, Axis Bank and Yes Bank. As of October 31, OET’s outstanding debt was Rs 1,769 crore. The firm will invest a further Rs 1,600 crore in research and product development.

In August, Ola Electric raised $240 million (Rs 2,000 crore) from the State Bank of India to set up its lithium ion cell factory. This was part of an overall $384 million financing round, including debt and equity this year, which also saw participation from Singapore’s sovereign fund Temasek.

Ather Energy, Ola’s competitor in the space, raised Rs 900 crore in funding from existing investors Hero MotoCorp and Singapore's GIC in September. Ather began selling scooters in Nepal, its first international market, in November. Electric two-wheeler sales have been steadily recovering from a 56% drop in June, after the government clawed back Faster Adoption of Manufacturing of Electric Vehicles (FAME-II) subsidies from some companies, leading to prices shooting up.