Investor trims Ola's valuation to about $3 billion, says report

An investor in ride-hailing giant Ola has marked down its valuation further after slashing it by nearly half at the onset of the Covid-19 pandemic that disrupted business a year ago, according to a report by The Capital Quest.

This development comes at a time when Ola has revealed new growth plans, including setting up a Rs 2,400-crore electric vehicle facility expected to become the world’s largest two-wheeler factory. Ola’s ride-hailing business is recovering after the coronavirus pandemic’s hurt and demand for its food business and financial services improves.
 

The Capital Quest report said Ola, operated by ANI Technologies Pvt. Ltd, was one of the worst-hit technology startups in India as many companies switched to a work-from-home routine and physical distancing norms curbed demand for travel. It said the company’s revenue plunged around 95 per cent after India imposed a lockdown in late March 2020, co-founder and CEO Bhavish Aggarwal had said at the time. This even forced the company to cut costs and lay off staff.
 

The report claimed that this had likely prompted a fund managed by US-based investment firm Vanguard Group to slash Ola’s valuation by 45 per cent in dollar terms between December 31, 2019 and June 30, 2020. Ola was valued a little over $6 billion in 2019. This came down to around $3.3 billion as Vanguard marked down the value of its holding, according to the report.

The fund has now knocked down the value of its investment by another 9.5 per cent in dollar terms. This means Vanguard reckons the cab-hailing startup is now worth around $3 billion, according to estimates by The Capital Quest.
 

Ola has raised a total funding of about $3.8 billion, according to the data platform Crunchbase. The Bengaluru-based company raised over $500 million from late 2018 to December 2019 from Steadview Capital, Hyundai, Flipkart co-founder Sachin Bansal and Kia Motors, among several other investors.
 

What is interesting is that Vanguard has not revised its estimates of the value of its shares despite the lockdown being lifted several months ago, said the report by The Capital Quest.
 

India had begun opening up its economy after two months of hard lockdown. Most restrictions on businesses have been lifted, barring a few advisories to prevent the virus from spreading. Ola has spread its wings in other ancillary businesses such as financial services and electric vehicles. Those businesses have separately raised funding.
 

According to the industry sources, with India easing lockdowns for the pandemic, Ola has reported close to 100 per cent recovery in key cities during the festive season, and the spike in demand is expected to continue.
 

Last November, US-based mutual funds T Rowe Price and Vanguard had lowered their valuations of Indian unicorn companies Paytm and Ola, due to the disruption created by the Covid-19 pandemic in the first half of the year.