Ola Electric filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) on December 22. The planned issue involves the issuance of new shares worth up to ₹5,500 crore and an offer for sale (OFS) of 95,191,195 equity shares at par value of ₹10.
Bhavish Aggarwal, the founder of Ola Electric, will sell around 47.4 million shares of the SoftBank Group-backed e-scooter maker. The company is targeting a valuation in the range of $7 billion to $8 billion by early 2024.
The IPO subscription dates have not been announced yet, but reports suggest it could begin in early 2024. Neither the offering price nor the IPO price range were disclosed.
Also read | Ola Electric IPO: Issue Details, Objectives, Risk Factors & More; Check out the top 10 things you should know about DRHP
On November 17, Ola Electric completed a crucial transformation into a public company, a crucial step in its preparations for an IPO. This involved a corporate restructuring and required a change of company name from Ola Electric Mobility Private Limited to Ola Electric Mobility Limited. Conversion of a limited liability company into a joint stock company is a mandatory procedure for companies seeking to be listed on the stock exchange.
Here are the ten most important things investors interested in the topic should know
What is the allocation for each investor category? The process follows a bookbuilding approach with specific allocations: 75 percent of the issue to qualified institutional buyers (QIBs); up to 15 percent for non-institutional investors (NIIs); and no more than 10 percent for individual retail bidders.
Fund objective: The proposed issue includes a new share release of up to ₹5,500 crore and an offer for sale (OFS) of 95,191,195 equity shares at par value of ₹10. Bhavish Aggarwal, the founder of Ola Electric, will sell around 47.4 million shares of the SoftBank Group-backed e-scooter maker. The company is targeting a valuation in the range of $7 billion to $8 billion by early 2024.
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Sale of shares: Apart from Bhavish Aggarwal, various companies like Indus Trust, Kaha Wave Ventures, Alpine Opportunity Fund, DIG Investment Internet Fund, MacRitchie Investments, Matrix Partners India Investments, SVF II Ostrich and Tekne Private Ventures XV are also selling shares in the IPO.
What are the funds used for? According to DRHP, the proceeds from the new issue will be used for various purposes:
– ₹1,226.4 crore for Ola Cell Technologies' Gigafactory project
– ₹1,600 crore for investment in research and development (R&D).
– ₹350 crore for organic growth initiatives and general corporate purposes
– ₹800 crore to repay/advance debt of Ola Electric Technologies (OET)
Who are the book managers? The underwriters are Kotak Mahindra Capital, Citigroup Global Markets India, BofA Securities India, Goldman Sachs (India) Securities, Axis Capital, ICICI Securities, SBI Capital Markets and BOB Capital Markets. Link Intime India is the appointed registrar of the offering.
Rising debts: The company expects continued operating losses in the near term while focusing on business expansion and product portfolio growth.
Possible losses: Ola Electric is aware of the potential for short-term operating losses but remains committed to investing in business expansion and diversification ₹1,600 crore has been earmarked for research and development (R&D) in the next three years.
Also read | Ola prepares to unveil Krutrim, India's first homegrown AI: When, where and how to watch the launch
Sales highlights: In November 2023, Ola Electric recorded its highest-ever sales of 30,000 units and a market share of 35%. Since its founding in December 2021, the company has sold over 300,000 electric vehicles. In December alone, the company sold 9,841 e-scooters, contributing to the total sales of over 1.8 lakh vehicles in FY24. Notably, the company emerged as the leader among Indian electric two-wheelers (E2Ws) and original equipment manufacturers (OEMs) in terms of revenue from E2W sales in FY23.
Increase in sales: In FY2023, Ola Electric recorded a significant increase in operating revenue, which is at ₹2,630.93 crore from ₹373.42 crore in the previous year. Sales from operating business were included for the quarter ending June 30, 2023 ₹1,242.75 crore.
Regulatory Compliance: Ola Electric announced a payment of ₹15 lakh as a penalty to the Ministry of Road Transport and Highways (MoRTH) following an incident in which one of its S1 scooters caught fire in Pune in March 2022.
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