The new Ola electric scooters displayed during its launch at the Ola headquarters in Bangalore on August 15, 2021. (Photo by Manjunath Kiran / AFP) (Photo by MANJUNATH KIRAN/AFP via Getty Images)
Manjunath Kiran | Afp | Getty Images
Indian e-scooter maker Ola Electric said on Monday it aimed to raise $734 million in this year’s biggest domestic IPO, with foreign investors eyeing the offering after the SoftBank-backed firm was valued at a sharply lower $4 billion.
The IPO comes amid a stock market boom in India, as more than 150 companies have raised nearly $5 billion through public listings between January and July, nearly double the figure of the corresponding period last year, LSEG data shows.
The first IPO by an Indian electric vehicle maker will let investors bet on a clean energy push by Prime Minister Narendra Modi’s government, as well as firms from Tata Motors and TVS to Hyundai Motor.
“Tesla is for the West and Ola for the rest,” has become a catchphrase best linked to the firm’s chairman, Bhavish Aggarwal, who is betting big on cleaner vehicles, after having often publicly criticized gasoline and diesel vehicles.
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With e-scooter prices starting at around $900, Ola Electric has become the biggest player in a country where adoption of clean vehicles is still low, but rising rapidly. It has 46% of the e-scooter market despite slashing sales goals last year.
A term sheet showed the IPO, which will run from Aug. 1 to Aug. 6, puts a value of $4 billion on the company, which sold its first scooter in 2021.
That valuation is about 25% lower than Ola’s last funding round in September, led by Singapore’s investment firm Temasek which valued the EV maker at $5.4 billion.
The lower figure stems from a correction in the valuation of global tech companies, while Ola also wants to attract participants to the stock offering, said sources who spoke on condition of anonymity.
The IPO is set to draw investor bids from Fidelity, Nomura and Norges Bank at the $4 billion valuation, as well as several Indian mutual funds, sources who asked not to be identified told Reuters.
In the IPO, Ola will issue new shares to raise $657 million while existing investors offload their stake of about $77 million to IPO investors, the term sheet showed.
The company unveiled the price band of 72 rupees to 76 rupees ($0.86-$0.91) in an advertisement in the Financial Express newspaper, with a discount of 7 rupees a share for some eligible employees.
Aggarwal and investors such as SoftBank and Matrix Partners will sell part of their stakes in the IPO.
Monday’s newspaper ad showed 10% of the IPO will be reserved for retail investors, with proceeds going to fund capital expenditure and research and development efforts.
Aggarwal also had plans to start selling an electric car in 2024, but Reuters reported they have been suspended to let the company focus on e-scooters. It also plans a foray into electric motorcycles.
The company, which disrupted the two-wheeler market forcing a pivot by incumbents such as TVS, Hero MotoCorp and Bajaj Auto, reported a loss of 15.84 billion rupees ($189 million) before tax in the fiscal year 2023-24.