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Business News/ Companies / News/  Pawan Munjal to plug into Ola Electric

Pawan Munjal to plug into Ola Electric

An investment in Ola Electric will be made by Munjal in his personal capacity and not linked to Hero MotoCorp
  • An investment in Ola Electric would be a major endorsement of the potential of electric mobility in India
  • Pawan Munjal, chairman of Hero MotoCorp,has also invested in electric scooter manufacturing startup Ather Energy Premium
    Pawan Munjal, chairman of Hero MotoCorp,has also invested in electric scooter manufacturing startup Ather Energy

    New Delhi/Mumbai: Pawan Munjal might be the next big investor after Ratan Tata to invest in Ola Electric.

    Billionaire Pawan Munjal, chairman of Hero MotoCorp Ltd—India’s largest two-wheeler maker by sales—is in advanced talks to invest in the electric mobility arm of ride-hailing company Ola, said four people directly aware of the development.

    An investment in Ola Electric Mobility Pvt. Ltd would be a major endorsement of the future potential of electric mobility in India at a time when Prime Minister Narendra Modi’s administration is pushing automakers and cab aggregators to shift to electric vehicles. Munjal will follow Ratan Tata, chairman emeritus of Tata group, as an investor in Ola Electric.

    Munjal has been discussing the potential investment over the last few months with Arun Sarin as well as the senior management of Ola Electric, one of the four people cited earlier said on condition of anonymity.

    Sarin, a former chief executive of Vodafone Group Plc, was appointed an independent director of Ola Electric in May. Sarin, an investor in Ola and Ola Electric, is also a mentor and adviser to Ola Electric.

    “This deal has been in the works over the last few months and people close to Mr Munjal were aware of the ongoing negotiations. He intends to invest in different startups going forward and this is also one among them," the person said.

    The quantum of the investment could not be immediately ascertained.

    An investment by Munjal will be significant for Bhavish Agarwal-led Ola since it will be the second fundraise from the promoter of an automobile company, the first being Tata.

    The people cited earlier said Munjal, who has also invested in electric scooter manufacturing startup Ather Energy, is looking at investment opportunities in a range of startups in the future mobility ecosystem.

    Besides Tata, Ola Electric, incorporated in February 2017, counts venture capital funds SoftBank Group Corp., Tiger Global and Matrix Partners India as its investors.

    Earlier in July, the startup joined the unicorn club, after receiving funds worth $250 million from Japanese investment bank and venture capital fund SoftBank.

    In March, Ola said Ola Electric had raised 400 crore from US-based hedge fund Tiger Global and Matrix India. This was Ola’s first external fundraise for its electric mobility business. This was followed by an undisclosed investment by Ratan Tata in May.

    “This investment will also give Bhavish Agarwal a different avenue for raising funds and he would not have to rely on SoftBank for future funding," said the first person cited earier.

    An investment in Ola Electric will be made by Munjal in his personal capacity and would not be linked to Hero MotoCorp at this moment.

    “Ola and Munjal’s family office have already invested together in dockless scooter-sharing startup Vogo," said a banker aware of the development, the second of the four cited earlier.

    “We do not comment on market speculation," said a spokesperson of Hero MotoCorp in response to emailed queries. Ola did not respond to emailed queries.

    Ola Electric has been on a fundraising spree in 2019 to achieve its target of deploying one million electric vehicles by 2021.

    “Mr Munjal now plans to become a venture capitalist and the investment in Ola will probably be another step towards that direction," said the second person. “Also, in the long term, this makes sense since Hero can supply its electric two-wheelers in the coming years to Ola. Also, at a time when the Union government is trying to promote electric mobility, such investment from a promoter of a two-wheeler manufacturer makes sense."

    Automakers are investing in various startups in the electric as well as future mobility space either to develop new technologies or to learn ways to adjust their existing businesses in line with fast changes in the mobility landscape.

    In March, South Korea’s Hyundai Motor Group announced an investment of $300 million in Ola Cabs, as part of a strategic partnership between the two companies. With this deal, both Hyundai and Kia Motors will work with the Bengaluru based startup to develop customized electric vehicles and charging stations appropriate for ride-hailing applications. In the future Hyundai will also deploy its low-cost electric vehicles in Ola’s fleet as part of the arrangement.

    “This investment in Ola Electric, though in a personal capacity, will give Pawan Munjal a ready customer for his electric two-wheelers without having to think about a new brand and new chain of dealerships," said Avik Chattopadhayay, founder of Expereal, a brand consulting firm.

    “Ola also has a plan to deploy one million electric vehicles in India and in the long term might use Hero’s electric two-wheelers in its fleet. It is both interesting and intriguing to see an eight-month old venture already valued at $1 billion, with big names like Tiger Global, SoftBank, Ratan Tata and Arun Sarin involved."

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    Published: 22 Aug 2019, 11:53 PM IST
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