Ola Electric, a prominent manufacturer of electric two-wheelers in India, has recently received approval from the Securities and Exchange Board of India (Sebi) for its initial public offering (IPO). This milestone marks a significant event as it represents the country’s first IPO by an electric vehicle (EV) startup. The company, headquartered in Bengaluru, submitted its draft red herring prospectus (DRHP) to SEBI on December 22. In the prospectus, Ola Electric proposed to raise Rs 5,500 crore through a fresh issue of shares.
Ola Electric’s move to go public aligns with its strategic initiatives to expand its market presence and further develop its electric mobility solutions in the country.
Components of Ola Electric’s IPO
- Offer-for-Sale (OFS) Details:
Ola Electric plans to offer 95.2 million shares through an Offer-for-Sale (OFS). This includes existing stakeholders selling part of their shares to the public.
- Promoter’s Stake:
Bhavish Aggarwal, the promoter of Ola Electric, intends to sell 47 million shares as part of the OFS, representing half of the total OFS component.
- Other Stakeholders:
Various entities such as Indus Trust, Kaha Wave Ventures, Alpine Opportunity Fund, DIG Investment Internet Fund, MacRitchie Investments, Matrix Partners India Investments, SVF II Ostrich, and Tekne Private Ventures XV will also divest their stakes in the company.
- Pre-IPO Placement:
Ola Electric can raise up to Rs 1,000 crore through a pre-IPO placement, which could impact the size of the fresh issue accordingly.
These details highlight Ola Electric’s strategy to raise funds through a combination of fresh share issues and the sale of existing stakes, facilitating its expansion and development in the electric vehicle sector in India.
Utilization of Ola Electric’s IPO Proceeds
- Debt Repayment:
Ola Electric plans to allocate Rs 800 crore from the IPO proceeds to repay loans its subsidiaries owe to Axis Bank and Bank of Baroda.
- Expansion of Gigafactory:
Approximately Rs 1,264 crore will be invested in expanding the capacity of its gigafactory, a large-scale facility dedicated to manufacturing electric vehicles.
- Organic Growth Initiatives:
Rs 350 crore will be used for initiatives aimed at organic growth, likely including market expansion and operational improvements.
- Research and Development:
An additional Rs 1,600 crore is earmarked for research and development activities over the next three years. This investment is crucial for enhancing innovation and staying competitive in the rapidly evolving electric vehicle market.
- Target Valuation:
Ola Electric aims for a valuation of $6 billion through this public offering, as reported by The Economic Times.
These allocations reflect Ola Electric’s strategic priorities to strengthen its manufacturing capabilities, innovate in electric vehicle technology, and manage its financial obligations, aiming to sustain growth and leadership in the EV sector.
Financial Growth and IPO Plans of Ola Electric
Financially, Ola Electric’s revenue from operations soared significantly in fiscal year 2023, increasing more than sevenfold to ₹2,630.93 crore compared to ₹373.42 crore the previous year.
For its upcoming initial public offering (IPO), Ola Electric has enlisted Kotak Mahindra Capital Company, Citigroup Global Markets India, BofA Securities India, Goldman Sachs (India) Securities, Axis Capital, ICICI Securities, SBI Capital Markets, and BOB Capital Markets as its book-running lead managers. The company plans to list its equity shares on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
About Ola Electric
Based in Bengaluru, Ola Electric manufactures electric vehicles (EVs) and critical components such as battery packs and motors at its Ola Futurefactory located in Krishnagiri, Tamil Nadu. The company is developing an EV hub in Krishnagiri and Dharmapuri districts, encompassing its existing Ola Futurefactory, the forthcoming Ola Gigafactory, and co-located suppliers.
Since launching its first EV model, the ‘S1 Pro’, in August 2021, Ola Electric has rapidly expanded its product lineup to include five scooter models. Within just nine months of introducing its first electric scooter, Ola Electric emerged as India’s leading electric two-wheeler brand, based on registrations reported on the VAHAN Portal of the Ministry of Road Transport and Highways.
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