Ola picks banks for initial public offer

Ola Cabs has started hiring investment banks and lawyers to work on its plans for an initial public offering that could see the ride-hailing company raise more than $1 billion, three people aware of the development said.

“Ola has shortlisted Kotak Mahindra Capital and Citigroup, and conversations are on with others such as Morgan Stanley. More banks will be added later. Two law firms have also been hired. A large part of the IPO will be primary capital to propel the company’s growth, while there will also be a secondary share sale by some investors. These details will be firmed up close to the filing of the draft prospectus,” one of the three people said, seeking anonymity.

The homegrown rival to Uber could file its draft papers with the Securities and Exchange Board of India (Sebi) as early as October, which means it could be in a position to hit the markets by the March quarter, the first person said.

The IPO will include SoftBank-backed Ola’s mobility, cab-hailing, and financial services businesses. The electric vehicle business, Ola Electric, is owned by a separate company controlled by Ola co-founder Bhavish Aggarwal.

Ola Cabs may be targeting a float size of $1.5 billion to $2 billion and is figuring the specifics with bankers, two people aware of the talks said separately, also seeking anonymity.

Queries sent to Ola, Morgan Stanley and Kotak Mahindra Capital remained unanswered till press time, while Citigroup declined to comment.

Last month, Temasek Holdings and Warburg Pincus invested $500 million in ANI Technologies Pvt. Ltd, which runs Ola. Aggarwal also participated in the round. He currently owns a 7.9% stake in the 11-year-old company, according to researcher Tracxn.

“A number of Indian startups were awaiting the final guidelines on direct overseas listing while prepping for India as an alternative to go public. Further, being India-centric helps these businesses list in the home market, where their customers are. Recent IPOs have shown Indian startups can derive good valuations in home markets,” said Karan Marwah, partner, CFO advisory at KPMG in India.

“On the demand side, there is investor excitement to be a part of the growth story of these everyday consumer brands, coupled with the lack of other credible investment alternatives in India,” added Marwah.