Bhavish Aggarwal pledges more Ola Electric shares for loans as stock continues to slide
This is the third time Aggarwal has pledged his Ola Electric shares since the company went public in August 2024. He previously did so in November 2024 and February to fund his private AI venture Krutrim. What does this mean for Ola Electric and its shareholders?
New Delhi: Bhavish Aggarwal, chairman and managing director of Ola Electric Mobility Ltd, pledged an additional 2% of his stake in the listed company during the September quarter to raise loans for an unnamed group company. This is the third time Aggarwal has pledged his Ola Electric shares since the company went public in August 2024.
Mint’s review of Bengaluru-based Ola Electric’s shareholding pattern and disclosures to the exchanges showed that Aggarwal put up the additional stake as collateral for a loan from Aditya Birla Capital Ltd. The company did not disclose the size of the loan or the group company it was meant for. With this, just over a tenth of Aggarwal's 30.02% stake in Ola Electric has been pledged.
Pledging shares—using them as collateral—is a method promoters use to raise money for their ventures. Typically in these arrangements, the promoter must transfer the pledged shares to the lender if the company is unable to repay the loans on time. Promoters of companies such as Vedanta have previously pledged their entire stakes to raise funding for their ventures.
Additional risk for shareholders
While it is not uncommon for promoters to pledge or encumber their shares to borrow capital, Aggarwal’s move is significant as he has been using his stake in publicly listed Ola Electric to raise money for his privately held artificial intelligence venture, Krutrim.
Since the company went public, he has pledged his shares thrice to raise loans. He previously pledged his Ola Electric shares to fund Krutrim in November 2024 and February 2025. These pledges were to institutions such as Axis Trustee Services, Avendus Structured Credit Fund II, Avendus Finance Private Ltd, and Incred Credit Opportunities Fund I. Krutrim has remained a non-starter since being founded in April 2023.
Shriram Subramanian, founder at proxy advisory firm InGovern Research Services, said lenders to a listed company sometimes insist on promoters pledging shares to raise funds for the company. However, this is different from when the promoter pledges shares of the listed company to fund a private venture.
“The benefits of pledging shares to raise money to grow the business of a listed company accrue to all the shareholders. However, if this happens for a privately held firm, then the shareholders have to bear the risk of that privately held business not performing well, and the lenders enforcing the pledge."
When Elon Musk acquired Twitter (now X) for $44 billion in October 2022, he pledged a significant portion of his Tesla stock to secure loans from major banks such as Morgan Stanley, Barclays, and Bank of America. The high-stakes move has since left Musk in a precarious position, as the fate of his social media empire is now tightly intertwined with Tesla’s stock performance.
Stock down, collateral up
Shares of Ola Electric have taken a hit since the company went public through a ₹6,146-crore initial public offering (IPO) in August 2024. Having listed at ₹76 a share, the stock was at ₹44.3 at the end of trading hours on 10 November—a 41% fall. Since Aggarwal first pledged his Ola Electric shares in November, the company’s stock is down 36%. Bloomberg reported in June that Aggarwal had to top up his collateral with an additional ₹20 crore when the stock slid below ₹50.
Moreover, the company slashed its revenue guidance for FY26 by nearly a third to ₹3,000-3,200 crore during a recent earnings call, causing the stock to crash nearly 5% twice during a single trading session in the span of a week.
Ola Electric has also been looking to raise funds for itself in the last six months amid a fall in sales. Late last month the board approved an equity fundraise of ₹1,500 crore. This was five months after it approved a fundraise of ₹1,700 crore through the issuing of non-covertible debt venturers (NCDs) to refinance its debt. The company has to pay a total of ₹2,114 crore of debt and interest by FY30, according to its disclosures.
Aggarwal said during the company's June quarter earnings call on 14 July, “We do have some debt obligations. Again, we have shown that in a graph in the note. We will be refinancing some of that debt, not the term loans, but some of the corporate debt that we had taken before our IPO."
No longer top dog
Credit rating agencies have noted that the company will have to resort to more fundraising if its sales continue to slide. “If the unit sales volume scale-up remains impacted, the company will be compelled to explore more capital-raising options, which pose funding risk," credit rating agency Icra said in a 1 May note for Ola Electric Technologies (OET), the company through which Ola Electric Mobility manufactures and sells its vehicles. OET is responsible for 99% of the listed entity's revenue.
Ola Electric’s sales nearly halved to 52,666 units year-on-year during the September quarter, as it lost its leadership in the electric two-wheeler market. It now ranks fourth behind TVS Motor Company, Bajaj Auto and Ather Energy, which have all seen sales surge.
Queries sent to Ola Electric remained unanswered.
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