India’s Ola Electric Seeks $740M in IPO
SoftBank-backed electric scooter pioneer, Ola Electric, is set to ignite the Indian stock market with its highly anticipated Initial Public Offering (IPO). The company has announced a price band of Rs 72-76 per share for its upcoming IPO, aiming to raise approximately $740 million. This landmark event marks the debut of an Indian electric vehicle (EV) maker on the stock exchange and is poised to be one of the largest IPOs of the year.
A Strong Foothold in a Growing Market
Ola Electric has rapidly established itself as the dominant player in India’s burgeoning e-scooter market. Despite the country’s relatively low adoption of electric vehicles, the demand for cleaner transportation options is surging. The company’s IPO is expected to capitalise on this growing trend and attract significant investor interest.
The IPO has already garnered substantial support from high-profile institutional investors. Fidelity has committed approximately $75 million, while Nomura and Norges have pledged $100 million each to the anchor book. Additionally, several prominent Indian mutual funds, including SBI, HDFC, UTI, and Nippon India, are expected to collectively invest over $700 million.
Valuation and IPO Details
While previous estimates suggested a valuation of $4.2-4.4 billion, the final valuation for Ola Electric has been adjusted to a range of $4-4.2 billion. This downward revision reflects the broader correction in global tech valuations and the company’s desire to ensure robust participation in the IPO.
The IPO comprises a fresh issue of Rs 5,500 crore and an offer for sale of up to Rs 645.96 crore by existing shareholders, including founder Bhavish Aggarwal. The proceeds from the IPO will be utilised for expanding the company’s cell manufacturing capacity, repaying debt, research and development, business expansion, and general corporate purposes.
Financial Performance and Future Outlook
Ola Electric has demonstrated impressive revenue growth, with sales surging 90.4% to Rs 5,009.8 crore in the fiscal year ended March 2024. However, the company has also incurred significant losses, with net losses widening to Rs 1,584.4 crore during the same period.
Despite the losses, Ola Electric has solidified its market position with a 35% market share in the electric two-wheeler segment. The company’s robust sales and expansion plans have fueled investor optimism, making the IPO a highly anticipated event.
As India accelerates its transition to electric mobility, Ola Electric’s IPO is seen as a pivotal moment for the EV industry. With strong investor backing and a promising growth trajectory, the company is well-positioned to capitalise on the opportunities presented by the burgeoning electric vehicle market.
Key Points
- Ola Electric IPO to raise approximately $740 million.
- Price band set at Rs 72-76 per share.
- Strong investor interest from both domestic and international institutions.
- Company valued at $4-4.2 billion.
- Proceeds to be used for capacity expansion, debt repayment, R&D, and business growth.
- Significant growth in revenue but persistent losses.
- Dominant player in the Indian e-scooter market with 35% market share.
