Ola Electric, the frontrunner in India's electric two-wheeler market, has secured a crucial green light from the Securities and Exchange Board of India (Sebi) for its initial public offering (IPO). This marks a significant milestone for the company and paves the way for the first-ever IPO by an Indian electric vehicle (EV) two-wheeler manufacturer.
Ola Electric's IPO aims to raise Rs 7,250 crore through a combination of a fresh issue of equity shares worth Rs 5,500 crore and an offer for sale (OFS) of Rs 1,750 crore. Existing shareholders, including Ola founder Bhavish Aggarwal (selling 47.3 million shares) and initial investors like AlphaWave, Alpine, DIG Investment, and Matrix (selling a combined 47.89 million shares), will offload a portion of their holdings through the OFS. Additionally, the company is considering a pre-IPO placement of shares worth Rs 1,100 crore, which could potentially reduce the size of the fresh issue.
Ola Electric currently holds a dominant position in the Indian electric two-wheeler market, boasting a market share of approximately 52%. According to data from the government's VAHAN website, the company registered a remarkable 34,000 units in a single month, reflecting a year-on-year growth of 54%. This impressive sales performance underscores the growing popularity of electric two-wheelers in India and Ola Electric's position as a frontrunner in this space.
While Ola Electric's financial statements showcase a positive trend in revenue generation, the company is still in the investment phase. For the financial year ending March 2023, the company reported consolidated revenues of Rs 2,782 crore, a significant increase of nearly 510% year-over-year. However, net losses also widened to Rs 1,472 crore due to increased expenses associated with growth and expansion.
For Q1 2023-24, Ola Electric reported a total income of Rs 1,272 crore with losses of Rs 267 crore. The company's net worth stood at Rs 2,111 crore as of June 30, 2023.
The funds raised through the IPO will be strategically utilized by Ola Electric to fuel future growth and innovation. As per the draft red herring prospectus (DRHP), the company plans to allocate around Rs 1,226 crore for capital expenditure (capex) to expand its manufacturing capabilities. Additionally, Rs 800 crore will be directed towards repaying debt.
A significant portion, approximately Rs 1,600 crore, will be invested in research and development (R&D) to further refine technology and develop new electric vehicle models. Finally, Rs 350 crore will be dedicated to inorganic growth opportunities, potentially including strategic acquisitions or partnerships.
The approval from SEBI comes at a time when Ola's ride-hailing service, Ola Cabs, is also in preliminary discussions with investment banks regarding a potential IPO. This strategic move highlights Ola's ambitions to expand its market presence and leverage the growing demand for electric vehicles in India.