In a significant step for India’s burgeoning electric vehicle (EV) industry, Ola Electric has received approval from the Securities and Exchange Board of India (SEBI) for its initial public offering (IPO). This groundbreaking move marks the first IPO by an EV startup in the country and is set to be one of the largest new-age public offerings in 2024.
Pioneering a New Path
Ola Electric, renowned for its innovative electric two-wheelers, is set to raise up to ₹5,500 crore through this IPO. The Bengaluru-based company filed its draft red herring prospectus (DRHP) with SEBI on December 22. The IPO includes a fresh issue of shares as well as an offer-for-sale (OFS) component of 95.2 million shares. The OFS will see existing stakeholders sell part of their shares to the public, with Ola Electric’s founder, Bhavish Aggarwal, offloading 47 million shares, or half of the total OFS.
Other significant shareholders planning to reduce their stakes include 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.
Strategic Use of Funds
The proceeds from the IPO will be utilized for several strategic initiatives. A key focus is on repaying loans owed by Ola Electric’s subsidiaries to Axis Bank and Bank of Baroda. The company plans to allocate approximately ₹1,264 crore towards expanding the capacity of its gigafactory, a state-of-the-art manufacturing facility dedicated to EV production. An additional ₹800 crore will go towards debt repayment, and ₹350 crore will be used for organic growth initiatives.
Commitment to Innovation
Ola Electric is committed to staying at the forefront of the EV industry. As part of this commitment, the company has earmarked ₹1,600 crore for research and development over the next three years. This significant investment aims to drive innovation and ensure that Ola Electric remains competitive in the rapidly evolving EV market.
Flexibility in Fundraising
In a move to optimize its fundraising strategy, Ola Electric has kept the option open to raise ₹1,000 crore via pre-IPO placement. If exercised, this option will correspondingly reduce the size of the fresh issue. This flexibility highlights the company’s proactive approach to securing the necessary capital for its ambitious growth plans.
Valuation and Market Impact
Through the IPO, Ola Electric is targeting a valuation of $6 billion, reflecting its dominant position in the Indian EV market and its potential for future growth. As the country’s largest electric two-wheeler manufacturer, Ola Electric’s IPO is expected to set a significant precedent for other EV startups in India.
Implications for the EV Industry
The SEBI approval of Ola Electric’s IPO is a milestone not just for the company but for the entire Indian EV industry. It signals growing investor confidence in sustainable transportation solutions and the EV market’s potential. The successful listing of Ola Electric on the stock market could pave the way for more EV companies to explore public funding, thereby accelerating the growth and adoption of electric vehicles in India.
A Bright Future
Ola Electric’s IPO is more than just a financial milestone; it’s a statement about the future of transportation in India. The funds raised will help repay debts, expand manufacturing capabilities, and fuel research and development. With a targeted valuation of $6 billion, Ola Electric is poised to make a significant impact, driving the future of electric mobility in India.
In conclusion, Ola Electric’s journey to becoming a publicly traded company is a testament to its innovation and leadership in the EV sector. This IPO not only positions the company for further growth but also highlights the promising future of electric vehicles in India.
