Ahead of its planned initial public offering (IPO), mobility start-up Ola has raised a fresh $500 million from Singapore government’s investment fund Temasek and Plum Wood Investment, an affiliate of Warburg Pincus. The start-up’s co-founder and group CEO, Bhavish Aggarwal, also participated in the financial round, the company said in a statement on Friday. It, however, did not disclose the specifics of the deal and the timeline of its IPO. The transaction is understood to be largely secondary. Ola’s early backers Tiger Global and Matrix Partners India have sold shares in the round.
“This is among the largest investments in the Indian consumer internet space by these funds and is a testament to the robust and resilient business built by Ola, as it continues to scale up across various categories and geographies in its ride hailing business,” Ola said. Ola had last raised $300 million from Hyundai Motor Company and its subsidiary Kia Motors in 2019. The latest investment takes the mobility start-up’s total fund tally to well over $4 billion.
According to two separate filings made by the participating investors with the Competition Commission of India (CCI) earlier this week, the investment will give Plum Wood a minority shareholding in Ola’s parent entity ANI Technologies while Aggarwal will acquire additional rights in the firm. The filings showed that Fort Canning is also backing this round. “The proposed combination will provide ANI with the necessary financial resources to remain a significant and competitive player in the cab-aggregator market in India,” according to one of the filings.
Though Ola did not elaborate on how it plans to utilise the capital, it indicated that the funds will be deployed to scale up its varied mobility offerings in line with the evolving preferences of the consumers in a post-pandemic world. “Over the last 12 months we have made our ride-hailing business more robust, resilient and efficient. With strong recovery after lockdown and a shift in consumer preference away from public transportation, we are well-positioned to capitalise on the various urban mobility needs of our customers,” chairman and group CEO Bhavish Aggarwal said.
The pandemic and the ensuing restrictions to check its spread had significantly hit the businesses of mobility firms like Ola and Uber as people restricted non-essential movements and corporates moved to working from home. Following the onset of the pandemic in India last year, Ola’s revenues dipped by as much as 95%, forcing it to let go of 1,400 employees. The funding will be a much-needed boost for the firm as companies operating in the space look to craft a sharper mobility strategy and provide more flexible, affordable options to consumers. According to a report by The Capital Quest, Ola’s early backer Vanguard Group cut the value of its investment, bringing down the firm’s valuation to about $3 billion from over $6 billion.
Ola did not comment on the IPO plans. In a media interview in March, a company official had said an IPO was undoubtedly on the “mid-term horizon”. Ola will join a bunch of internet firms that are preparing to get listed. In the last one year, as the main ride-hailing business of Ola got hit due to the pandemic-led travel restrictions, the company started focusing on launching its own electric scooters. Ola Electric is a separate company backed by Temasek, SoftBank and Tiger Global. It is coming up with a 500-acre factory in Tamil Nadu to produce electric scooters and claims it would be the largest two-wheeler facility in the world upon completion. End June, Aggarwal had said Phase-I of the e-scooter factory is nearing completion. The company has said it will produce over 10 million electric vehicles a year.
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