As Uber reels under crises, Ola in talks with Tencent to raise $400 mn

India’s largest taxi aggregator Ola is in talks to raise $400 million in fresh funding from Chinese Internet behemoth Tencent as it looks to quickly expand its service in the country at a time when its global rival Uber is reeling under multiple crises.

Ola is shoring up on investments as it dabbles with the idea of using electric cars as cabs and is increasingly relying on its in-house leasing unit to grow the base of partners on its platform. The company has raised close to $400 million in funding since November when Softbank led a $230 million investment in the company at a $3.5 billion valuation.

Sources told Business Standard that Ola was indeed in talks with Tencent but nothing had been finalised just yet. The Times of India and Economic Times newspapers first reported about the two parties being in talks on Thursday, citing sources that said the round would push Ola’s valuation to over $4 billion.

Globally, Tencent is part of the anti-Uber cartel through its backing of rivals such as Didi Chuxing in China, Lyft in the US, and Go-Jek in South East Asia. The company, in many cases, has invested alongside rival Alibaba and its close ally Softbank, which incidentally is the largest investor in Ola today.

At a time when Softbank is rumoured to be in talks to pick up a small but significant share in Uber, which is valued at $69 billion, it might make sense for Ola to bring in other strong investors. Ola is Softbank’s second-largest bet in India after e-commerce firm Snapdeal, which the Japanese investor is now pushing to sell to its rival Flipkart for a song.

There’s a sense that Ola is learning from such instances to ensure that it does not find itself in the same position as Snapdeal down the line. The firm has amended its Articles of Association by including a clause that Softbank would need the founders’ approval before increasing its stake either through primary or secondary share purchases.

From Tencent’s perspective, Ola fits perfectly into the company’s agenda of acquiring a stake in Indian firms that are competing against US rivals. Ola’s situation is similar to Flipkart’s, where Tencent made a $700 million investment in April, which is being hounded by US giant Amazon. So far, the Chinese firm has maintained a small but diverse portfolio in India, including Practo, Hike Messenger, Byju’s, and Flipkart.