Ola follows Flipkart, moves to a group company structure
Ola will set up a group holding company that will own Ola cabs, Foodpanda and its nascent businesses of electric cabs and international operations
Bengaluru: Ola is adopting a holding company structure similar to that of India’s most successful internet startup Flipkart to boost the cab-hailing company’s valuation and improve the management of its businesses, four people familiar with the matter said.
Ola (ANI Technologies Pvt. Ltd) will set up a holding company that will own different units, including its core cab business, food delivery app Foodpanda and the nascent businesses of electric vehicles and the international unit, the people cited above said on condition of anonymity. These businesses and some others are expected to have their respective heads who will run them independently, the people said.
After the recent departure of Ola’s chief operating officer Vishal Kaul, senior vice-presidents Saikiran Krishnamurthy and Pallav Singh are expected to get bigger roles under the new structure, the people said.
Ola chief executive Bhavish Aggarwal wants to create a similar structure to that of Flipkart, the people said. A spokesperson for Ola declined to comment.
Flipkart agreed to sell 77% of the company to Walmart Inc. for $17 billion in a deal that valued the Indian startup at $21 billion.
Flipkart’s valuation was boosted by its units, fashion retailer Myntra and payments app PhonePe. Myntra comprised $5.5-6.5 billion of the $21 billion value, while PhonePe was valued at $1-1.5 billion, Mint reported on 9 May, the day the deal was announced.
The group company structure allowed Flipkart to improve its overall valuation and give enough management focus to each business, which were independent of the others.
Aggarwal, who is a very hands-on CEO, wants to do the same at Ola, which now owns several businesses that require skilled and focused management. For instance, the electric vehicles and international businesses have shown initial promise but they will need to be managed expertly if they are to grow into large units.
“It’s becoming difficult for Bhavish to devote attention to all the different businesses. The group structure is an efficient way to increase management bandwidth,” one of the four people cited earlier said.
In March, Ola hired former BMW executive Anand Shah to head the electric vehicle business.
It also appointed Pranay Jivrajka as CEO of Foodpanda, which may raise funds separately later this year.
Ola had bought Foodpanda in December in an all-stock deal and said it will invest $200 million towards growing the business.
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