Ola Electric is all set to launch its highly anticipated initial public offering (IPO) next Friday, targeting a Rs 5,500 crore (approximately USD 657 million) in capital. The electric scooter manufacturer’s IPO will open a day earlier for institutional investors and close on 6 August.
The red herring prospectus (RHP) reveals a significant adjustment in the offer for sale (OFS) component, reducing it to just under 85 million shares from the over 95 million initially listed. Bhavish Aggarwal, Ola Electric’s founder, will sell around 38 million shares, a reduction of about 20 per cent from the previously indicated 47.4 million shares in the December 2023 draft prospectus. Despite these changes, the fresh issue of shares aimed at raising Rs 5,500 crore remains unchanged.
Ola Electric reported revenue from operations of Rs 5,009.8 crore in the last fiscal year, an increase from Rs 2,630.9 crore in FY23. However, the company also recorded a loss of Rs 1,584.4 crore, up from Rs 1,472.1 crore the previous year. The IPO is expected to be launched at a valuation of around USD 4 billion, a decrease from the USD 5.4 billion valuation achieved after a USD 140 million funding round by Singapore’s sovereign wealth fund Temasek in September 2023.
The proceeds from the IPO will be strategically allocated, with Rs 1,227 crore dedicated to expanding Ola Electric’s battery cell manufacturing plant capacity from 5 GWh to 6.4 GWh by April 2025. Additionally, Rs 800 crore will be used to repay loans, Rs 1,600 crore will be invested in research and product development and Rs 350 crore will support various growth initiatives.
This IPO is one of the largest by a new economy firm this year, reflecting a resurgence of technology companies in the public markets. Other firms such as FirstCry, Awfis, Ixigo, Digit and Swiggy are also preparing for their own IPOs.
Ola Electric holds almost 40 per cent market share in the Indian electric scooter segment as of 27 July. However, competition is intensifying with rivals like Hero MotoCorp-backed Ather Energy, Bajaj Auto and TVS Motors gaining ground. In response to market pressures and in a bid to enhance profitability, Ola Electric is undergoing internal restructuring, including the layoff of 600-800 employees.
