Bhavish Aggarwal’s electric vehicle startup Ola Electric has received approval from the Securities and Exchange Commission of India (Sebi) for its Rs 7,250 crore initial public offering (IPO), people familiar with the development said. Following the market regulator’s approval, Ola Electric will become India’s first electric vehicle company to go public.
Sebi’s approval, coupled with a buoyant market, could enable the company to complete its IPO within a month, according to sources close to the matter. However, this timeline is not yet confirmed. Efforts to reach the company for comment were unsuccessful.
The IPO will include a fresh issue of ordinary shares worth Rs 5,500 crore and an offer for sale (OFS) of over 95 million ordinary shares valued at around Rs 1,750 crore.
Aggarwal, founder and CEO of Ola Electric, plans to sell up to 47.4 million shares, representing 3.48 per cent stake in the IPO. Other selling shareholders include Indus Trust, Alpine Opportunity Fund, DIG Investment, Internet Fund III (Tiger Global), MacRitchie Investments, Matrix Partners, SoftBank Vision Fund, Alpha Wave Ventures and Tekne Private Ventures.
The IPO is notable for several reasons: It is the first time in decades that a two-wheeler manufacturer has gone public. Also, this is Aggarwal’s first foray into IPO of a company. The company is targeting a valuation of between $7 billion and $8 billion.
Since entering the EV segment in 2017, Ola Electric has emerged as a dominant player, controlling over 35% of the market by FY2024. Data from VAHAN portal shows that Ola Electric’s market share has increased by 21% during FY2023.
As per the draft Red Herring Prospectus (DRHP), the proceeds from the new issue will be used for capital expenditure (capex), debt repayment and research and development (R&D). Of the total capital raised, the company plans to invest Rs 1,226 crore in capital expenditure and allocate Rs 800 crore towards debt repayment. In addition, it plans to spend Rs 1,600 crore on R&D and Rs 350 crore on organic growth initiatives.
The company’s total revenue increased by 510% from Rs 456 crore in FY22 to Rs 2,782 crore in FY23. This includes operating and other income. The Ebitda (earnings before interest, tax, depreciation and amortisation) profit/(loss) for FY23 improved from 157% in FY22 to 43% in FY22. However, the SoftBank-backed firm did not disclose the extent of the loss.
According to media reports, Ola Electric’s net loss doubled to around Rs 1,472 crore in FY23 from Rs 784.1 crore a year ago as expenses rose significantly. The company reported an Ebitda loss of Rs 1,318 crore in FY23 as its total expenses rose to Rs 3,383 crore from Rs 1,240 crore in FY22.
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