On December 22, Ola Electric IPO filed its Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI). The proposed offering consists of a new equity share release of up to 5,500 crore and an offer for sale (OFS) of 95,191,195 equity shares with a face value of 10.
Ola Electric founder Bhavish Aggarwal plans to sell approximately 47.4 million shares in the SoftBank Group-backed e-scooter maker. By early 2024, the company hopes to have a valuation of $7-8 billion.
The IPO subscription dates have not yet been announced, but reports suggest they will begin in early 2024. The offer price and the IPO price band have not been disclosed.
Ola Electric underwent a pivotal transformation into a public company on November 17, a critical step in its preparations for an IPO. This required corporate restructuring and a name change from Ola Electric Mobility Private Limited to Ola Electric Mobility Limited. Conversion from a private limited company to a public company is a required procedure for companies seeking to be listed on the stock exchange.
Here are the top ten things to know for investors interested in the subject.
1. How much money should be set aside for each type of investor? The process involves a book-building approach, with certain allocations earmarked for qualified institutional buyers (QIBs), up to 15% for non-institutional investors (NIIs), and no more than 10% for retail individual bidders.
2. Funds Targeted: The proposed issue includes a new equity share release of up to 5,500 crore, as well as an offer for sale (OFS) of 95,191,195 equity shares with a face value of 10. Ola Electric founder Bhavish Aggarwal plans to sell approximately 47.4 million shares in the SoftBank Group-backed e-scooter maker. By early 2024, the company hopes to have a valuation of $7-8 billion.
3. In addition to Bhavish Aggarwal, various entities such as 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 selling stakes in the IPO.
4. What will the funds be used for? According to the DRHP, the proceeds from the new issue will be used for a variety of purposes, including:
- Rs. 1,226.4 crore for Ola Cell Technologies’ Gigafactory project
- Rs. 1,600 crore for R&D investments
- Rs. 800 crore to repay/prepay debts owed by Ola Electric Technologies (OET).
5. Who are the bookkeepers? 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 are the book-running lead managers. The offer’s registrar has been designated as Link Intime India.
6. Increasing Debts: The company expects to continue incurring operational losses in the short term while focusing on business expansion and product portfolio expansion.
7. Potential Losses: While Ola Electric acknowledges the possibility of short-term operating losses, the company remains committed to investing in business expansion and diversification, with an estimated 1,600 crore slated for R&D over the next three years.
8. Highlights in sales: In November 2023, Ola Electric achieved its highest-ever sales, reaching 30,000 units and capturing a 35% market share. The company has sold over 300,000 electric vehicles since its inception in December 2021. The company sold 9,841 e-scooters in December alone, contributing to total FY24 sales of over 1.8 lakh vehicles. Notably, the company emerged as the revenue leader among Indian electric 2-wheelers (E2Ws) and original equipment manufacturers (OEMs) in FY23.
9. Revenue Increase: In fiscal year 2023, Ola Electric saw a significant increase in revenue from operations, rising to 2,630.93 crore from 373.42 crore the previous year. Revenue from operations was reported at 1,242.75 crore for the quarter ended June 30, 2023.
10. Regulatory Adherence: Ola Electric disclosed a payment of 15 lakh as a penalty to the Ministry of Road Transport and Highways (MoRTH) following an incident in Pune in March 2022 in which one of its S1 scooters caught fire.
