India (Commonwealth) _ According to reliable sources it is reported that Bhavish Aggarwal’s electric car startup, Ola Electric, has received clearance from the Securities and Exchange Board of India (Sebi) for its Rs 7,250 crore initial public offering (IPO). Ola Electric is slated to go public as the first electric vehicle firm in India after receiving approval from the market regulator.
According to those familiar with the situation, the business may be able to launch its IPO within a month with Sebi’s clearance and a strong market. This timeframe is yet unverified, though. We couldn’t get in touch with the firm to get a comment.
In addition to an offer for sale (OFS) of more than 95 million equity shares, estimated to be valued at about Rs 1,750 crore, the IPO would include a new issue of equity shares totaling Rs 5,500 crore.
The founder and CEO of Ola Electric, Aggarwal, intends to sell up to 47.4 million shares, or 3.48 percent of the company, during the IPO. Indus Trust, Matrix Partners, SoftBank Vision Fund, DIG Investment, Internet Fund III (Tiger Global), MacRitchie Investments, Alpha Wave Ventures, SoftBank Vision Fund, and Tekne Private Ventures are among the other selling shareholders.
The IPO is significant for a number of reasons: It’s the first time a two-wheeler company has joined the mainstream market in decades. Furthermore, this is Aggarwal’s first attempt at taking over a public company. The company is aiming for a $7-8 billion value.
With more than 35% of the market in FY24, Ola Electric has become a dominant force in the EV industry since joining it in 2017. According to data obtained from the VAHAN site, Ola Electric’s market share increased from 21% in FY23.
The draft red herring prospectus (DRHP) states that debt repayment, R&D, and capital expenditures (capex) will be the three categories to which the proceeds of the new issuance would be applied. The company intends to use Rs 800 crore for debt repayment and Rs 1,226 crore for capital expenditures out of the total amount obtained. It also plans to invest Rs 350 crore in organic growth efforts and Rs 1,600 crore in research and development.
The overall income of the firm increased by 51% from Rs 456 crore in FY22 to Rs 2,782 crore in FY23. This include operating revenue as well as other sources of income. The profit/loss for FY23’s Ebitda (earnings before interest, taxes, depreciation, and amortization) increased from 157% in FY22 to 43% in FY23. The SoftBank-backed business did not, however, reveal the lost amount.
According to media estimates, Ola Electric’s net loss more than quadrupled to around Rs 1,472 crore in FY23 from Rs 784.1 crore in the previous fiscal year as a result of sharply higher expenditures. The company’s total costs increased to Rs 3,383 crore in FY23 from Rs 1,240 crore in FY22, resulting in an Ebitda loss of Rs 1,318 crore. Approximately 400–500 people will be let go by Ola Electric during the next few weeks. The move, according to a story in The Economic Times, attempts to manage operational expenditures in advance of its projected initial public offering (IPO).
The research stated that while a reduction in the overall employment is anticipated, some of the impacted employees may be replaced at a lower cost by new hiring.
According to a source cited in the paper, “They (the Ola Electric team) are finalizing the list across different teams inside.” The figures have already been finalized by three or four teams, but the organization as a whole will be affected by the reduction.
The firm stated that it will employ 3,733 people as of October 2023 when it filed its draft IPO paperwork in December of the previous year. The draft papers state that in FY23, the company’s employee turnover rate was 47.48 percent. The Securities and Exchange Board of India (Sebi) is now reviewing Ola’s application for an initial public offering. Through the issuance of fresh shares, the business hopes to raise Rs 5,500 crore.
The ride-hailing division of the Ola Group, Ola Cabs, reportedly let go of about 200 workers in April. Hemant Bakshi, the chief executive of Ola Cabs, and Kartik Gupta, the chief financial officer (CFO), both left the firm in less than two weeks.
Ola Electric is attempting to maintain its leadership in the Indian electric scooter sector, which includes the anticipated employment cutbacks. With sales of more than 37,000 scooters in May, the business achieved a 50% market share. According to the data, the industry’s overall sales of non-commercial electric two-wheelers increased by 17% in May over the previous month, with over 74,000 units sold.
