Ola Electric IPO: On December 22, Ola Electric submitted a draft of its Red Herring Prospectus (DRHP) to the Securities and Exchange Board of India (SEBI). A new equity share release of up to ₹5,500 crore and an offer for sale (OFS) of 95,191,195 equity shares at a face value of ₹10 are included in the proposed issue.
Founder’s Share Sale
The founder of Ola Electric, Bhavish Aggarwal, plans to sell about 47.4 million shares in the company that makes e-scooters and is backed by SoftBank Group. By early 2024, the company hopes to be valued between $7-8 billion. Although the IPO subscription dates are still unknown, there have been rumours that they might start in early 2024. The offer price and the IPO price range have not been made public.
Corporate Restructuring
An important step towards preparing for an IPO was Ola Electric’s transformation into a public company on November 17. The company’s name had to change from Ola Electric Mobility Private Limited to Ola Electric Mobility Limited as a result of this corporate restructuring. A company that wants to be listed on a stock exchange must first convert from a private limited company to a public company.
How much money is allocated to each investor category?
A book-building method is used in the process, with specific allocations set aside for qualified institutional buyers (QIBs) at 75% of the issue, non-institutional investors (NIIs) at up to 15%, and retail individual bidders at no more than 10%.
Funds Target
A new equity share release of up to ₹5,500 crore and an offer for sale (OFS) of 95,191,195 equity shares at a face value of ₹10 are included in the proposed issue. The founder of Ola Electric, Bhavish Aggarwal, plans to sell about 47.4 million shares in the company that makes e-scooters and is backed by SoftBank Group. By early 2024, the company hopes to be valued between $7-8 billion.
Stake Divestment
Apart from Bhavish Aggarwal, several other entities are also offering their stakes in the IPO, including Indus Trust, Tekne Private Ventures XV, Matrix Partners India Investments, DIG Investment Internet Fund, MacRitchie Investments, and Kaha Wave Ventures.
What purpose will the money serve?
The proceeds from the new issue will be distributed in accordance with the DRHP for the following uses:
- ₹1,226.4 crore for the Gigafactory project by Ola Cell Technologies
- ₹1,600 crore will be invested in research and development (R&D).
- ₹350 crore for general corporate purposes and initiatives related to organic growth.
- ₹800 crore to settle or advance Ola Electric Technologies’ (OET) debts
Who are the book managers?
Axis Capital, ICICI Securities, BOB Capital Markets, Citigroup Global Markets India, BofA Securities India, Goldman Sachs (India) Securities, and Kotak Mahindra Capital are the book-running lead managers. The offer’s designated registrar is Link Intime India.
Increasing Debts
While concentrating on business expansion and product portfolio growth, the company anticipates sustained operational losses in the near future.
Potential Losses
Despite the possibility of short-term operating losses, Ola Electric is determined to invest in business diversification and expansion, allocating an estimated ₹1,600 crore for research and development (R&D) over the following three years.
Sales Highlights
Ola Electric achieved its greatest-ever sales in November 2023, selling 30,000 units and taking a 35% market share. In December 2021, the company began operations and has since sold more than 300,000 electric cars. The company sold 9,841 e-scooters in December alone, which added to the total sales of over 1.8 lakh vehicles for FY24. Notably, in terms of revenue from E2W sales in FY23, the company became the leader among Indian original equipment manufacturers (OEMs) and electric 2-wheelers (E2Ws).
Revenue Surge
Ola Electric’s operating revenue increased significantly in the 2023 fiscal year, leaping to ₹2,630.93 crore from ₹373.42 crore the year before. The revenue from operations for the quarter that concluded on June 30, 2023, was ₹1,242.75 crore.
Regulatory Adherence
Ola Electric reported to the Ministry of Road Transport and Highways (MoRTH) that it had paid ₹15 lakh as a penalty after one of its S1 scooters caught fire in Pune in March 2022.
Keep watching our YouTube Channel ‘DNP INDIA’. Also, please subscribe and follow us on FACEBOOK, INSTAGRAM, and TWITTER