Bengaluru: Cab hailing service Ola received Rs1,675 crore from its largest shareholder SoftBank Group Corp. in November as part of a bigger funding round that will lower the company’s valuation to about $3 billion from $4.5 billion.
Ola (ANI Technologies Pvt. Ltd) issued preference shares worth Rs1,675 crore to SoftBank in November 2016, documents with the Registrar of Companies show.
Ola, which has been trying to raise fresh capital since last June, is in talks with new investors to get at least $500 million more, two people familiar with the matter said on condition of anonymity. If Ola gets new investors, SoftBank will invest more in the company, the people said.
In this round, the valuation of Ola, which has so far raised nearly $1.5 billion in cash, will slide to about $3 billion on a pre-money basis, the people said. Pre-money refers to the valuation excluding the current round’s cash infusion. Ola’s post-money valuation will be determined by the exact amount of capital it finally attracts.
Ola has been struggling to raise capital partly because it is locked in a bruising battle with Uber, the world’s most valuable and deep-pocketed start-up, for India’s cab hailing market. After selling its Chinese business to Didi Chuxing last August, succeeding in India became one of the top priorities for Uber. Many investors are fearful of backing an Uber rival, the people cited above said. Investors also expressed doubts about the viability of the cab hailing business, they said. For the year ended March 2015, losses at Ola jumped by more than 20 times to Rs754.87 crore even as revenue rose from Rs51.05 crore to Rs418.25 crore, documents show.
Ola and SoftBank didn’t respond to emails seeking comment.
Earlier this week, India’s largest Internet firm Flipkart raised a mammoth $1.4 billion from Tencent, eBay and Microsoft in a down round. Flipkart’s valuation fell to $11.6 billion from $15 billion on a post-money basis.
Ola, which was India’s third-most valuable Internet start-up, is likely to retain its position despite the down-round. Online marketplace Snapdeal, which was once valued at $6.5 billion, is up for sale at a fraction of its peak valuation. Snapdeal’s place as India’s second-most valuable Internet firm has been taken over by digital payments firm Paytm.