Ola Electric to launch IPO soon; files DRHP with SEBI to raise Rs 5500 crore

Bhavish Aggarwal-led EV giant Ola Electric is about to launch its IPO soon as it has filed Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI). 

According to DRHP, The startup aims to raise Rs 5,500 crore through an initial public offering (IPO). The development is a significant step for the company as it seeks to expand its market presence and capabilities.

Who are the selling shareholders?

The IPO comprises a fresh issue of equity shares and an offer for sale (OFS) of up to 95.2 million shares. Bhavish Aggarwal, the company's promoter, along with Indus Trust and other major investors like Alpha Wave, Alpine Opportunity, Tiger Global, and SoftBank, will participate in the OFS.

Aggarwal is set to divest 47.4 million shares, making him the largest seller in the OFS.

While Bhavish Aggarwal is the single largest shareholder in the company, SoftBank is the largest external shareholder with a 21.98% stake, followed by Tiger Global, which holds a 6.03% share. ANI Technologies, Indus Trust, and Alpha Wave have stakes of 4.35%, 3.85%, and 3.49%, respectively.

Matrix Partners, Hyundai, and Temasek own 3.43%, 2.95%, and 3.02% of the shares in the company, respectively.

How will Ola Electric utilize the raised proceeds?

Ola Electric plans to allocate the funds raised from the IPO towards expanding the capacity of its cell manufacturing plant, repaying or pre-paying existing debts, investing in research and product development, and supporting organic growth initiatives. A significant portion of the funds will also be directed towards general corporate purposes.

Surge in losses

Despite a seven-fold surge in revenue to Rs 2,631 crore in the fiscal year ending March 2023, Ola Electric's losses increased by 87.76% to Rs 1,472 crore. The company, however, has shown robust sales figures, selling over 300,000 vehicles since its launch and achieving a market share of 32% in India's electric two-wheeler sector. 

Future plans 

Ola Electric is not only focusing on expanding its scooter line but also plans to introduce a motorcycle lineup by the end of next year. However, the company acknowledges potential challenges, including continued operating losses in the near term due to investments in business expansion and product portfolio diversification.

Additionally, Bhavish Aggarwal's involvement in his new AI startup, Krutrum AI, is noted as a potential risk factor in the company's growth and focus.

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