Electric scooter maker Ola Electric receives SEBI approval for IPO; aims to raise Rs 5,500 crore

Bengaluru-based electric vehicles maker Ola Electric has received approval from the Securities and Exchange Board of India (SEBI) for its initial public offering (IPO).

The development comes six months after the EV giant filed its draft red herring prospectus (DRHP) with SEBI on December 22, 2023.

The company aims to raise up to Rs 5,500 crore through a fresh issue of shares, coupled with an offer-for-sale (OFS) component of 95.2 million shares.

Bhavish Aggarwal to offload shares

The funds from the IPO will be raised through a combination of fresh issue and the OFS, where existing stakeholders will sell part of their shares to the public.

Bhavish Aggarwal, the promoter of Ola Electric, plans to offload 47 million shares, making up half of the total OFS.

Other stakeholders, including Indus Trust, Alpha Wave Ventures, Alpine Opportunity Fund, DIG Investment Internet Fund, MacRitchie Investments, Matrix Partners India Investments, SVF II Ostrich, and Tekne Private Ventures XV, will also divest their shares.

The EV giant also has the option to raise an additional Rs 1,000 crore through pre-IPO placement, which would reduce the fresh issue size correspondingly.

Repaying the debts

A portion of the IPO proceeds is earmarked for repaying loans owed by Ola Electric's subsidiaries to Axis Bank and Bank of Baroda. Approximately Rs 1,264 crore will be allocated for expanding the capacity of its gigafactory, Rs 800 crore for debt repayment, and Rs 350 crore for organic growth initiatives.

Furthermore, around Rs 1,600 crore will be invested in research and development over the next three years.

Who are the major stakeholders?

According to the DRHP, Bhavish Aggarwal holds the largest stake in Ola Electric with 36.94% shares, followed by SoftBank at 21.98%.

Other significant stakeholders include Tiger Global (6.03%), Indus Trust (3.85%), and Alpha Wave Ventures (3.49%).

Since filing the DRHP, Ola Electric has raised $62 million in debt, including $50 million from EvolutionX in April. So far, The EV maker has raised over $1 billion in equity and debt rounds, with its last valuation standing at $5.5 billion.

Is Ola Electric profitable?

No, Ola Electric is not profitable. However, the company has shown substantial growth, with its total revenue going up by 510% to Rs 2,782 crore in FY23 from Rs 456 crore in FY22. Total revenue includes revenue from operations and other income

It's worth noting that the company's losses also grew by 87.76% to Rs 1,472 crore in the fiscal year ending March 2023. The firm has not yet filed its annual report for FY24.