Ola Electric IPO: SoftBank-backed E2W maker raises ₹2,763 crore from anchor investors ahead of subscription

Ola Electric IPO: Ola Electric has raised ₹2,763 crore from anchor investors ahead of its IPO subscription opening for bidding. India’s largest electric two-wheeler (e2W) maker's initial public offering (IPO) is all set to hit the D-Street for its three-day subscription on Friday, August 2, and will close on Tuesday, August 6. The price band for the pure electric vehicle (EV) player's IPO has been fixed in the range of ₹72 to ₹76 per equity share with a face value of ₹10.

The anchor round of the SoftBank-backed public issue saw participation from a host of investors, such as foreign portfolio investors (FPIs), domestic mutual funds, and insurance companies. According to BSE data, the anchor allotment was made to over 80 domestic and foreign funds on Thursday, August 1.

Also Read: Ola Electric IPO opens tomorrow: GMP, issue details, 10 key things to know

SBI Mutual Fund (MF), HDFC MF, Nippon India MF, Sundaram MF, Bandhan MF, Bharti Axa Life Insurance Company, Kotak Mahindra Life Insurance Company, Government Pension Fund Global, Nomura India Investment Fund, Goldman Sachs (Singapore) Pte Ltd, and Fidelity were allotted shares in the anchor round.

Ola Electric IPO Details

Ola Electric's ₹6,146 crore IPO is the biggest since the ₹21,000 crore-IPO of the state-owned Life Insurance Corp (LIC) of India in May 2022. The IPO is a combination of a fresh issue of equity shares up to ₹5,500 crore and an offer for sale (OFS) of 8.49 crore equity shares worth ₹645.56 crore at the upper end of the price band by promoters and investors. 

This takes the total issue size to ₹6,145.56 crore. Under the OFS, Ola Electric's founder, Bhavish Aggarwal, will sell around 3.8 crore shares. The issue's lot size is 195 equity shares and in multiples of 195 equity shares thereafter.

Ola Electric IPO has set aside 75 per cent of its shares for qualified institutional buyers (QIB), 15 per cent for non-institutional institutional investors (NII), and 10 per cent for retail investors. The E2W has allotted 36.35 crore equity shares to 84 funds at ₹76 apiece, aggregating the transaction size to ₹2,763 crore.

Also Read: Ola Electric IPO: Will the electric two-wheeler maker become one-stop shop for EV industry? Here’s what analysts say

OLA Electric IPO's book-running lead managers are Bob Capital Markets Ltd., Goldman Sachs (India) Securities Private Ltd., ICICI Securities Ltd., Axis Capital Ltd., Bofa Securities India Ltd., SBI Capital Markets Ltd., and Kotak Mahindra Capital Company Ltd. Link Intime India Private Ltd. is the registrar for this issue.

Ola Electric's IPO basis for share allocation is anticipated to be finalised on August 7. The shares will be deposited to the allottees' demat accounts on the same day as the refund, which is scheduled to start on Thursday, August 8. Ola Electric's share price will likely be listed on BSE and NSE on Friday, August 9.

Also Read: Ola Electric to launch first all-electric motorcycle in India by 2025: CEO Bhavish Aggarwal

For Ola Electric, the public issue will provide the much-needed impetus to enhance cell manufacturing capacity and research and development on future technologies and products. Ola Electric plans to use ₹1,227.6 crore of the proceeds to expand the capacity of its cell manufacturing plant to 6.4 GWh from 5 GWh. 

The EV startup also plans to utilise nearly ₹1,600 crore from the IPO proceeds for research and product development purposes, around ₹800 crore to repay debts and ₹350 crore for organic growth initiatives. 

Phase 1(a) and Phase 1(b) of the establishment and expansion of the Ola Gigafactory in Tamil Nadu will be funded from internal accruals and long-term borrowings availed by its arm, Ola Cell Technologies Pvt Ltd (OCT). A portion of the proceeds will be used for capital expenditures incurred by OCT to expand the cell manufacturing plant's capacity from 5 GWh to 6.4 GWh.

Also Read: Ola Electric IPO: From key investors to risks, here are 10 things to know from RHP before investing to ₹6,146 crore issue

Ola Electric Company Details

Ola Electric Mobility Ltd (OEML) is a pure EV player in India. It produces EVs and their components and builds vertically integrated manufacturing and technological capabilities.  The E2W player has announced four new products and delivered seven. 

As of March 31, 2024, they operated an omnichannel, direct-to-customer distribution network with 431 service centres and 870 experience centres throughout India. The company's EV hub in Tamil Nadu includes co-located suppliers - Ola Futurefactory for manufacturing EVs, and Ola Gigafactory for cell cells.

Although Ola is building an electric vehicle hub in the districts of Krishnagiri and Dharmapuri in Tamil Nadu, it already has a battery innovation centre, Gigafactory, and Futurefactory in Bengaluru.

The firm's listed peers include Hero MotoCorp (P/E of 28.89), Bajaj Auto (P/E of 34.02), Eicher Motors (P/E of 33.58), and TVS Motors (P/E of 68.99). Revenue at OEML increased by 88.42 per cent, but profit after tax dropped by 7.63 per cent between March 31, 2024, and March 31, 2023.

OEML announced a line-up of electric motorcycles—Cruiser, Adventure, Roadster, and Diamondhead —on August 15, 2023, and expects to begin delivery of the motorcycles in the first half of fiscal 2026.

On future product launch plans, the company said, "We plan to further launch affordable mass-market Ola S1 models, including E2Ws (electric two-wheelers) targeted at the personal, business-to-business and last-mile delivery segment by the first half of fiscal 2025."

It further said, "We also plan to commence delivery of our motorcycles, which we announced on August 15, 2023, by the first half of fiscal 2026. We plan to expand our product portfolio further and cover mass-market motorcycles to capture a broader base of consumers across different product types and price points in the long run."