Ola Electric Plans IPO at $4.5 Billion Valuation
Ola Electric, the SoftBank-backed electric vehicle (EV) maker, is preparing for an initial public offering (IPO) with a valuation of approximately $4.5 billion. According to industry sources, this valuation represents an 18% decline from its previous funding round, when it was valued at over $5.5 billion. Bhavish Aggarwal started the company, which expects to file for an initial public offering next month.
IPO Strategy and Approval
According to sources acquainted with the situation, the decision to price the IPO attractively is intended to promote long-term growth and wealth creation for investors. Ola Electric gained approval from the Securities and Exchange Board of India (Sebi) on June 20 to proceed with its IPO plans, with a target of generating Rs 7,250 crore (about $860 million). This permission will allow Ola Electric to become the first Indian electric vehicle startup to go public.
Previous Funding and Valuation
Ola Electric said in October of the previous year that it had raised around Rs 3,200 crore ($380 million) through an equity and debt deal. This finance was spearheaded by prominent investors, notably Temasek, and included project loans from the State Bank of India. This investment lifted Ola Electric’s valuation to $5.5 billion, up from $5 billion previously. However, fluctuations in global IT stock valuations have resulted in a reduction in the company’s valuation.
The funds raised last October were supposed to serve as a preliminary to the IPO, with Aggarwal initially eyeing a $6 billion valuation for the transaction. In the impending IPO, Aggarwal intends to sell up to 47.4 million shares, accounting for a 3.48 percent ownership in the company. Other selling stockholders 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.
Use of IPO Proceeds
The draft red herring prospectus (DRHP) outlines the allocation of proceeds from the fresh issue as follows:
- Rs 1,226 crore for capital expenditure (Capex)
- Rs 800 crore in debt payback
- Rs 1,600 crore for R&D.
- Rs 350 crores for organic growth efforts.
Manufacturing and Expansion
Ola Electric specializes in the production of EVs and critical components such as battery packs, motors, and vehicle frames. These processes take place at the company’s Futurefactory in Tamil Nadu, which is being extended to become the world’s largest two-wheeler factory, capable of producing 10 million units per year. This huge facility demonstrates the company’s commitment to expanding its production capacity to meet rising demand.
Ola Electric has also constructed a Gigafactory for Li-ion cell manufacturing in Tamil Nadu. This facility will start with a capacity of 5 gigawatt hours (GWh) and gradually increase to 100 GWh. This considerable investment in battery manufacturing is vital for minimizing reliance on foreign suppliers while also maintaining a consistent supply of critical components.
The business also operates a Battery Innovation Centre (BIC) in Bengaluru, which is outfitted with cutting-edge laboratory equipment for extensive cell research and development. This center is critical to expanding Ola Electric’s battery technology and boosting the performance and economy of its electric vehicles.
Conclusion
Ola Electric’s planned IPO is a crucial step toward becoming a leading participant in the electric vehicle sector. By going public, the company hopes to generate significant capital to support its ambitious expansion goals and strengthen its competitive position. Ola Electric is well-positioned for long-term success with to its strategy focus on capital expenditure, debt repayment, R&D, and organic expansion.
Ola Electric’s IPO, as the first Indian electric car firm to go public, is expected to draw significant investor interest. The company’s solid financial backing, unique production capabilities, and commitment to R&D make it an attractive investment option in the rapidly expanding EV sector.
Stay tuned for more updates and detailed coverage on Ola Electric’s IPO and its impact on the electric vehicle industry.
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