Ola Electric To Launch Smaller IPO At Reduced Valuation On Aug. 2

Ola Electric Mobility Ltd. will launch a smaller-than-planned initial public offering on Aug. 2 at a reduced valuation of $4–4.2 billion, two persons aware of the matter told NDTV Profit on Friday.

The Ola Electric IPO, the first by an Indian automaker in 20 years, will remain open until Aug. 6 to include a weekend in between, one of the two persons cited earlier said. The anchor book will open on Aug. 1. The listing will take place on Aug. 9.

On June 20, 2024, the Bengaluru-based electric vehicle startup received approval from the Securities and Exchange Board of India to float its IPO, with certain observations. Those seem to have been ironed out now.

In December 2023, the maker of India’s best-selling electric scooters filed draft IPO papers with the market regulator to raise as much as Rs 7,250 crore—Rs 5,500 in fresh stock and Rs 1,750 crore via an offer-for-sale by existing investors. That now stands revised lower to Rs 6,200 crore, or $740 million, the second person said.

Both people requested anonymity, citing the confidential nature of the information. A spokesperson for Ola Electric refused to comment on the matter.

The valuation, too, has been trimmed. While Ola Electric was valued at $5.4 billion in its final private funding round, NDTV Profit’s calculations showed that the company was worth Rs 58,954 crore, or about $7 billion, at the time of the filing of the draft red-herring prospectus. That now stands revised to $4-4.2 billion, the second person said.

Based on NDTV Profit’s calculation, the promoter group’s holding of 45.14% on a fully diluted basis will decline to 39.6% after the fresh issue of shares and an offer for sale by Founder Bhavish Aggarwal, Indus Trust and other investors. The public shareholders’ stake will rise from 47% to 53%, while the Ola Employee Trust will hold 7%.

To be sure, Aggarwal was reportedly pushing for a $7-billion valuation despite investors indicating a much-lower $5 billion. At that valuation, investors may opt not to sell existing shares in the IPO.

In an interaction with NDTV Profit on June 29, Aggarwal brushed away valuation questions.

“We don’t have any valuation targets. The valuation pricing is set by the market,” he said. “The price band will be published in due course as we go through the steps. We’ll definitely do that in consultation with all our bankers, etc.”

“But our focus, as you’ve seen (in the monthly numbers), is in growing the industry and in growing our numbers—not valuations.”

Founded in the throes of a pandemic, Ola Electric launched its first electric scooter on Aug. 15, 2021—just eight months after its Futurefactory in Tamil Nadu went onstream. Today, the company retails five electric scooters and accounts for more than a third of India’s nascent electric two-wheeler industry. 

A 20 GW gigafactory is also under construction to localise battery manufacturing under a production-linked incentive scheme. At full capacity, it will be able to service 1.5 million scooters every year.