Goldman Sachs and Kotak Mahindra Capital are currently in advanced negotiations to be chosen as financial advisors, with Kotak working closely with the startup to define the framework of the IPO.
For an IPO in the first quarter of 2024, Ola Electric has hired investment banks Kotak Mahindra Capital and Goldman Sachs. Prior to the end of government subsidies for electric vehicles, the electric mobility firm wants to go public. Ola Electric is now one of the select group of venture capital-backed businesses to start IPO discussions within a six-month period.
The affordable housing startup India Shelter, which is supported by Nexus Ventures and Westbridge Capital, chose i-banks for a Rs 2,000 cr IPO on May 23.
According to persons familiar with the situation, the electric mobility firm held talks with a number of local and foreign investment banks in May to begin making plans for an IPO. The startup is supported by some of the largest private market investors in the world, including SoftBank and Tiger Global.
According to the persons, who asked to remain anonymous, after these talks, Kotak Mahindra Capital and Goldman Sachs are currently in advanced talks to be chosen as financial advisors, with Kotak closely collaborating with the startup to decide the IPO’s format. The persons also stated that Ola Electric intended to name at least two additional investment banks in the future. According to the people, the company has also hired Cyril Amarchand Mangaldas to serve as its legal counsel for the IPO.
According to the people, the company has also hired Cyril Amarchand Mangaldas to serve as its legal counsel for the IPO.
The motorbike launch and the development of the battery unit are two important events to keep an eye on in the timeline leading up to the IPO, according to one of those who was previously mentioned.
A new research and development (R&D) facility named the battery innovation center, covering 500,000 square feet, was being established by Ola in Bengaluru, according to the individual. In addition, the business intends to release a new electric motorcycle. Ola Electric has only ever dealt with the market for electric scooters.
The goal is to launch the IPO before the elections next year, the source previously mentioned said, adding that no particular deadlines have been set as of yet.
According to sources, Ola Electric’s planned IPO will include both primary and secondary share offers. The corporation is currently debating the valuation, meanwhile, in light of how unstable and young the market for electric vehicles is. Bhavish Aggarwal, the company’s creator and the owner of the cab aggregation company Ola, is reportedly aiming for a $10 billion market capitalization.
Ola Electric and Cyril Amarchand Mangaldas declined to comment. Undoubtedly, the business last had a formal valuation of $5 billion when it secured $200 million from, among others, Tekne Private Ventures, Alpine Opportunity Fund, and Edelweiss in January 2022. A media report claims that the business raised $300 million earlier this week at a valuation of $6 billion. According to sources, Qatar Investment Authority or Temasek, two sovereign funds from Singapore, may have expressed interest. Ola has not yet provided a confirmation on this, though.
According to the sources, the amount to which investors are willing to reduce their stakes is still unknown, and any values that are now quoted could significantly change as the IPO draws near depending on the market and investor attitude. But according to a source, the business would demand a “significant premium” over its private market worth.
The timing of Ola Electric’s IPO fits with the company’s plans to take advantage of the sharp increase in sales of its electric two-wheelers. Ola Electric experienced an amazing three-fold increase in sales volumes, reaching 730,000 units in the fiscal year 2022–2023 (FY23), according to Redseer’s electric mobility study published in April. This considerable increase in revenue offers Ola Electric’s IPO thoughts a supportive background.
According to the research, Ola’s market share increased to 30 percent in the March quarter and was at 22 percent for the entire year, topping Okinawa, Ampere, Ather, and Hero.
The government’s subsidies under the FAME-II (Faster Adoption and Manufacturing of Electric Vehicles in India) scheme are also set to expire, and Ola Electric has set a goal to go public before that time. The central government has gave the Ministry of Heavy Industries permission to reduce the FAME-II subsidies for electric two-wheelers acquired on or after June 1. The imperative for Ola Electric to list publicly and utilize the current subsidies before they disappear is further highlighted by this development.
The rate of subsidies for electric two-wheelers was reduced from 40% of the ex-factory price of automobiles to 15%. This suggestion is likely to have an effect on Indian EV players and may initially reduce demand.
Additionally, Ola Electric’s IPO discussions take place at a time when electric car businesses’ valuations are falling across the board. Notably, major EV companies like NIO Inc. and Rivian Inc. have seen significant drops in their share prices in the US, with NIO Inc. falling by 85% and Rivian Inc. falling by 90% from their respective peak values.