Ola Electric is leveraging Kotak and Goldman Sachs for the IPO, which is expected to launch in early 2024

Kotak Mahindra Capital and Goldman Sachs are currently in advanced discussions to be selected as financial advisors, with Kotak working closely with the startup to finalize the IPO structure

Ola Electric has hired investment banks Kotak Mahindra Capital and Goldman Sachs for an initial public offering (IPO) in early 2024. The electric mobility startup wants to go public before government subsidies for electric vehicles end. This makes Ola Electric one of the few venture-backed companies to enter IPO talks within six months.

On May 23, Moneycontrol had reported that Nexus Ventures and Westbridge Capital-backed affordable housing company India Shelter i-banks for a Cr2,000 IPO. Rs had selected.

The electric mobility startup, which is backed by some of the world’s largest private market investors including SoftBank and Tiger Global, held meetings with several domestic and foreign investment banks in May to start preparations for an IPO, according to those familiar with the matter People who informed Moneycontrol.

Following those discussions, Kotak Mahindra Capital and Goldman Sachs are currently in advanced discussions to be selected as financial advisors, with Kotak working closely with the startup to finalize the structure of the IPO, the people said, asking not to be identified. In addition, Ola Electric plans to appoint at least two more investment banks at a later date, the people added. According to the people, the company has also hired Cyril Amarchand Mangaldas as legal counsel for the IPO.

“Some key events to watch for in the IPO roadmap are the launch of the motorcycle and the progression of the battery pack,” said one of the people cited above.

The person said that Ola is building a new research and development (R&D) facility in Bengaluru called “Battery Innovation Center” covering an area of ​​over 500,000 square meters. In addition, the company plans to launch a new electric motorcycle. So far, Ola Electric has only been active in the electric scooter segment.

“No specific timelines have been set yet, but the goal is to launch the IPO before next year’s elections,” the person quoted above added.

Sources suggest that Ola Electric’s planned IPO will consist of a combination of primary and secondary stock offerings. However, the company is currently considering the valuation as the electric vehicle market is volatile and new. Company founder Bhavish Aggarwal, who also runs taxi aggregation company Ola, is aiming for a $10 billion market cap, according to people familiar with his mindset.

Goldman Sachs and Kotak did not respond to Moneycontrol’s inquiries despite reminders. Cyril Amarchand Mangaldas and Ola Electric declined to comment.

The company was last officially valued at US$ 5 billion when it raised US$ 200 million in January 2022 from Tekne Private Ventures, Alpine Opportunity Fund and Edelweiss, among others. According to a media report, the company raised $300 million earlier this week at a $6 billion valuation. Sources said Singapore’s Temasek or sovereign wealth fund Qatar Investment Authority may have expressed interest. However, there is still no confirmation from Ola.

The extent to which investors are willing to dilute their shares remains uncertain, and all numbers currently quoted could change significantly as the IPO approaches, depending on market conditions and investor sentiment, the sources said. However, a source said the company would expect a “significant premium” from its private market valuation.

As Ola Electric mulls its IPO, the timing aligns with the company’s ambitions to capitalize on significant growth in sales of its electric two-wheelers. According to Redseer’s Electric Mobility Report released in April, Ola Electric saw an impressive tripling of sales volumes, reaching 730,000 units in fiscal year 2022-2023 (FY23). This notable increase in sales provides a favorable backdrop for Ola Electric’s IPO considerations.

Ola’s market share also rose to 30 percent in the March quarter and also led the year with a 22 percent market share, followed by Okinawa, Ampere, Ather and Hero, the report said.

In addition, Ola Electric aims to go public before the end of government subsidies under the FAME II (Faster Adoption and Manufacturing of Electric Vehicles in India) program. Recently, the Ministry of Heavy Industry received central government approval to cut FAME II subsidies for electric two-wheelers purchased on or after June 1st. This development underscores the urgency for Ola Electric to go public and take advantage of existing subsidies before they wear off.

The subsidy rate for electric two-wheelers was reduced from the current 40 percent to 15 percent of the new vehicle price. This proposal is likely to impact EV players in India and potentially reduce demand in the early stages.

Additionally, Ola Electric’s IPO talks coincide with a period of falling valuations for electric vehicle companies worldwide. Notably, the stock prices of well-known EV companies such as NIO Inc and Rivian Inc have fallen significantly in the United States, with NIO Inc down 85 percent and Rivian Inc down 90 percent from their respective highs.

(With contributions by Bhavya Dilipkumar)

Ashwin Mohan

Nikhil Patwardhan

Chandra R Srikanth is Publisher – Technology, Startups and New Economy