Ola Electric IPO: Founder Bhavish Aggarwal to sell 47.4 million shares

Bhavish Aggarwal, the founder of Ola Electric, is set to sell around 47.4 million shares in the SoftBank Group-backed e-scooter maker, as per the company's preliminary draft papers filed with SEBI on December 22.

The proposed issue includes a fresh equity share release of up to ₹5,500 crore and an offer for sale (OFS) of 95,191,195 equity shares at a face value of ₹10. The process involves a book-building approach, with certain allocations earmarked: 75 percent of the issue for qualified institutional buyers (QIBs); up to 15 percent for non-institutional investors (NIIs); and not more than 10 percent for retail individual bidders.

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The company is targeting a valuation in the range of $7-8 billion by early 2024. The dates for the IPO subscription haven't been announced yet, but reports suggest it may commence in early 2024. Neither the offer price nor the IPO price band has been disclosed.

Utilisation of Funds

As per the draft red herring prospectus (DRHP), the proceeds from the fresh issue will be allocated for various purposes:

- ₹1,226.4 crore for Ola Cell Technologies' Gigafactory project

- ₹1,600 crore for research and development (R&D) investments

- ₹350 crore for organic growth initiatives and general corporate purposes

- ₹800 crore to repay/pre-pay debts of Ola Electric Technologies (OET)

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The book-running lead managers are Kotak Mahindra Capital, Citigroup Global Markets India, BofA Securities India, Goldman Sachs (India) Securities, Axis Capital, ICICI Securities, SBI Capital Markets, and BOB Capital Markets. Link Intime India is the appointed registrar of the offer.

Ola's Financial Performance

In the fiscal year 2023, Ola Electric witnessed a substantial increase in revenue from operations, soaring to ₹2,630.93 crore from ₹373.42 crore in the preceding year. For the quarter ended June 30, 2023, the revenue from operations was reported at ₹1,242.75 crore. 

Notably, the company emerged as a leader among Indian electric 2-wheelers (E2Ws) and original equipment manufacturers (OEMs) in terms of revenue from E2W sales in FY23.

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On November 17, Ola Electric underwent a pivotal transformation into a public company, a crucial step in its preparations for an IPO. This milestone involved corporate restructuring and necessitated a change in the company's name from Ola Electric Mobility Private Limited to Ola Electric Mobility Limited. The conversion from a private limited company to a public company is a mandatory procedure for firms aspiring to be listed on the stock exchange.