Ola Electric board likely to hire Goldman Sachs and Kotak Mahindra Capital for underwriting and Due diligence of the IPO.
Earlier this year OLA was in talks with investment Banks like Goldman Sachs and Kotak Mahindra Capital to get listed in the market. Before the end of government incentives for electric vehicles, the electric mobility firm wants to go public. Ola Electric is now one of the exclusive groups of venture capital-backed businesses to start IPO negotiations within six months.
A startup funded by Tiger Global and SoftBank By year’s end, OLA Electric will be ready to undertake its first public offering.
This might be India’s largest IPO this year despite sluggish market circumstances if it sells 10% of the IPO at that price, which is the legal minimum necessary to list.
CEO’s Comment
According to Reuters, which quoted sources, the company’s CEO and founder Bhavish Aggarwal were insistent about meeting the deadline, it will be “difficult” to submit its drafting papers, market to investors, and list by the end of the year.
The individual was speaking about Ola opening a brand-new research and development (R&D) facility with a 500,000-square-foot footprint in Bengaluru. The business also intends to release a brand-new electric motorcycle. Ola Electric has only ever dealt with the electric scooter market.
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 proposed IPO would include both main and secondary share offers. The corporation is presently 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.
What Valuations have to say about ola?
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 source 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 hasn’t yet confirmed this, though.
According to the sources, the amount to which investors are ready to reduce their stakes is still unknown, and any values that are now quoted could change significantly 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 had an amazing three-fold rise in sales volumes, reaching 730,000 units in the fiscal year 2022–2024 (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.
Government Role in EV sector
Government Role in EV sector
The government’s subsidies under the FAME-II (Faster Adoption and Manufacturing of Electric Vehicles in India) plan are also set to expire, and Ola Electric has set a goal to go public before that time.
 The national government has permitted the Ministry of Heavy Industries 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 go 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 affect Indian EV players and may initially reduce demand.
Additionally, Ola Electric’s IPO negotiations take place at a time when electric car businesses’ values have declined across the board. Notably, major EV companies like NIO Inc. and Rivian Inc. have had significant drops in their share prices in the US, with NIO Inc. falling by 85% and Rivian Inc. falling by 90% from their respective high values.
