Ola Electric, one of India’s leading electric vehicle (EV) manufacturers, has officially filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) for a substantial initial public offering (IPO) valued at INR 7,250 Crore. The filing positions Ola Electric to become the first Indian EV startup to go public, ushering in a new era for the burgeoning industry.
IPO Details and Participants:
The IPO comprises a fresh issue of INR 5,500 Crore, accompanied by an offer-for-sale (OFS) component of INR 1,750 Crore. Cofounder and CEO Bhavish Aggarwal, along with major investors such as Softbank, Temasek, Tiger Global, Alpha Wave, Tekne Capital, and Matrix Partners, are set to participate in the OFS. The company plans to list on both the BSE and NSE.
Utilization of Funds:
The fresh issue proceeds will primarily fund the Ola Gigafactory project’s capital expenditure, furthering the company’s commitment to innovation and expansion. Additionally, funds will be allocated for research and product development, organic growth initiatives, and general corporate purposes. The IPO funds will also contribute to repaying or prepaying indebtedness incurred by subsidiary Ola Electric Technologies.
Financial Performance and Risks:
Ola Electric’s financials, as outlined in the DRHP, reveal a reported loss of INR 1,472 Crore in the fiscal year ending March 2023, demonstrating a growth of 1.87 times from the previous fiscal year. Notably, revenues from operations surged over seven times year-on-year to INR 2,630 Crore in FY23.
The document also highlights potential risks, including operating losses in the near term and the possibility of significant delays in setting up the gigafactory. Challenges in automation, precision requirements for cell manufacturing, and regulatory hurdles are acknowledged as potential obstacles.
Key Players and Bookrunners:
Major participants in the OFS include Bhavish Aggarwal, SoftBank, and various investor groups. The IPO is being managed by prominent financial institutions, including 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.
Recent Developments:
The IPO filing comes on the heels of Ola Electric’s conversion into a public company and its rebranding as Ola Electric Mobility Limited in October. The company also secured a substantial INR 3,200 Crore funding round in a mix of equity and debt from investors such as Temasek and the State Bank of India.
As the markets regulator reviews the DRHP, Ola Electric positions itself among the Indian startups aiming to go public in 2024, leveraging positive market trends and investor sentiment.
