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Bhavish Aggarwal's Ola Electric gets Sebi approval for Rs 7,250-crore IPO

Sebi's approval, coupled with a buoyant market, could potentially enable the company to launch its IPO within a month

Bhavish Aggarwal, founder, Ola Electric

Bhavish Aggarwal, founder, Ola Electric

Shivani Shinde Mumbai

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Ola Electric, the electric vehicle startup by Bhavish Aggarwal, has secured approval from the Securities and Exchange Board of India (Sebi) for its Rs 7,250 crore initial public offering (IPO), said people aware of the development. Following the market regulator’s nod, Ola Electric is set to become the first Indian EV company to go public.

Sebi’s approval, coupled with a buoyant market, could potentially enable the company to launch its IPO within a month, according to those familiar with the matter. However, this timeline remains unconfirmed. Efforts to reach the company for comment were unsuccessful.

The IPO will comprise a fresh issue of equity shares amounting to Rs 5,500 crore, along with an offer for sale (OFS) of over 95 million equity shares, estimated to be worth around Rs 1,750 crore.

Aggarwal, Ola Electric's founder and chief executive officer, plans to sell up to 47.4 million shares, equivalent to a 3.48 per cent stake in the IPO. Other selling shareholders include Indus Trust, Alpine Opportunity Fund, DIG Investment, Internet Fund III (Tiger Global), MacRitchie Investments, Matrix Partners, SoftBank Vision Fund, Alpha Wave Ventures, and Tekne Private Ventures.

The IPO is noteworthy for several reasons: It represents the first time in decades that a two-wheeler manufacturer has entered the public market. Moreover, this is Aggarwal's inaugural foray into taking a company public. The firm is eyeing a valuation of $7-8 billion.

Since its entry into the EV segment in 2017, Ola Electric has emerged as a dominant player, commanding over 35 per cent of the market in FY24. Data from the VAHAN portal indicates that Ola Electric's market share has risen from 21 per cent in FY23.

According to the draft red herring prospectus (DRHP), the proceeds from the fresh issue will be allocated towards capital expenditure (capex), debt repayment, and research and development (R&D). Of total capital raised, the firm plans to invest Rs 1,226 crore in capex and allocate Rs 800 crore for debt repayment. Additionally, it intends to spend Rs 1,600 crore on R&D and Rs 350 crore on organic growth initiatives.

The company's total revenue witnessed an increase of 510 per cent, rising to Rs 2,782 crore in FY23, from Rs 456 crore in FY22. This includes revenue from operations and other income. The Ebitda (earnings before interest, taxes, depreciation, and amortisation) profit/(loss) for FY23 improved from 157 per cent in FY22 to 43 per cent in FY23. However, the SoftBank-backed company did not disclose the loss figure.

Media reports suggest that Ola Electric’s net loss approximately doubled to about Rs 1,472 crore in FY23 from Rs 784.1 crore in the previous financial year, as expenses surged significantly. The company reported an Ebitda loss of Rs 1,318 crore in FY23 as its total expenses escalated to Rs 3,383 crore, compared to Rs 1,240 crore in FY22.

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First Published: Jun 11 2024 | 8:40 PM IST

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