Ola Electric files DRHP with SEBI to raise ₹5,500 crore via IPO

Bhavish Aggarwal-led Ola Electric Technologies on Friday filed draft papers for an initial public offering (IPO) to raise ₹5,500 crore by issuing new shares, apart from a share sale by existing investors.

The IPO by Bengaluru-based Ola Electric, India’s largest electric two-wheeler maker in terms of sales, is the first attempt by an Indian pure-play electric vehicle maker to go public.

The share sale papers said promoter and chief executive Aggarwal will sell up to 47.4 million shares out of the 95.2 million shares on offer. That makes Aggarwal, who also founded Ola Cabs, the single-largest seller in the offer for sale (OFS). The issue also comprises a sale of new shares.

Other major stakeholders selling their shares include promoter group entity Indus Trusts, and investors Softbank Vision Fund, Matrix Partners India Investments, Alpha Wave Ventures, Alpine Opportunity Fund and Tekne Private Ventures.

Proceeds from the fresh issue of shares will be used towards capital expenditure for its cell manufacturing subsidiary for capacity expansion at the Ola Gigafactory from 5 GWh to 6.4 GWh; repayment or prepayment of debt incurred by Ola Electric; investment in research and product development; and organic growth initiatives, the company said in the draft prospectus. It estimates this capacity expansion to cost ₹1226 crore.

Ola Electric was last valued at $5.4-5.5 billion in October when it raised $384.43 million, including about $240 million in debt, from Temasek and State Bank of India.

The company, which was founded in 2017 and started deliveries meaningfully only in early 2022, reported a net loss before taxes of ₹267.1 crore in the June quarter, and ₹1472.1 crore for FY23.

“We have a limited operating history... We delivered our first EV scooter in December 2021, and have incurred losses and negative cash flows from operating activities in the three-months period ended June 30, 2023 and fiscals 2023, 2022 and 2021”, Ola Electric said in the draft filing.

“We may continue to incur operating losses in the near term as we invest in our business and expand our product portfolio, build capacity and scale our operations. For example, the expansion of our product portfolio, including the introduction of Ola S1 Air, the Ola S1 X+, Ola S1 X (2 kWh) and Ola S1 X (3 kWh) and our strategy of expanding our sales footprint across international automotive markets, could result in an increase in our operating costs”, it added.

Aggarwal has previously planned to take his ride-hailing startup Ola Cabs public.

Last week, founder Aggarwal formally unveiled his new generative Artificial Intelligence startup Krutrum AI, which he said is part of the “joint family” that is the Ola Group, even though Ola Electric does not hold any stake in the AI entity.

The prospectus stated Aggarwal’s focus on the new AI business could be a potential risk factor.