Ola Electric Mobility Limited IPO (OLA Cabs): Find All the Details Here

As the global discourse around the shift to sustainable living amplifies, the electric vehicles (EV) industry has been in the spotlight in India and worldwide over the past few years. Closer home, Ola Electric has been one of the pioneering companies in this space. The EV maker currently possesses a portfolio offering three eco-friendly scooters — the Ola S1X, Ola S1 Pro and Ola S1 Air. 

However, more recently, the company has been headlining the news for a different reason — the Ola Electric IPO is likely to be announced any time now. While the particulars of the dates and the pricing are yet to be announced, the market is already rife with speculation surrounding this share offer. 

In this article, we discuss all the key details surrounding the Ola IPO, so you can get a clear idea of where this offer may be headed and what to look for. 

Ola Electric IPO: An Overview

Ola Electric filed its draft red herring prospectus (DRHP) with the market regulator SEBI on December 22, 2023. So, the buzz is that the Ola Electric IPO may be announced any time this year. If completed successfully, this public offer could mark a new milestone in the Indian stock market history as Ola Electric will be the first EV startup to go public in the country. 

The DRHP does not specify the dates and the price band. However, here’s what we do know about the issue so far. The electric vehicle manufacturer plans to raise up to Rs. 5,500 crore through the fresh issue of shares. Additionally, one component of the issue also includes an offer-for-sale (OFS) of Rs. 1,750 consisting of 95.2 million shares. 

The company’s draft prospectus also reveals that the entity’s CEO Bhavish Aggarwal is to sell around 13% of the stake or up to 47.4 million shares via the IPO. Other promoter investments that are likely to be divested in this issue include the following: 

• SoftBank Vision Fund to sell 23.8 million shares
• Tiger Global to pare 6.4 million shares
• Alpha Wave Global to sell 3.8 million shares
• Matrix Partners India to sell 3.7 million shares 
• Temasek to sell 1.3 million shares

In a follow-up to the company filing its draft IPO paper, the SEBI issued a notification on June 14, announcing that it had cleared the Ola Electric DRHP on June 10. So, the Ola Electric IPO is ready to move forward into the next phase of the issue. However, as noted by the CEO, the timing of the issue depends on how quickly the remaining processes are completed. 

Ola Electric IPO Reservation

The reservation details available for the Ola IPO so far suggest that at least 75% of the net issue will be reserved for Qualified Institutional Buyers (QIBs). As for retail investors and non-institutional investors (like HNIs), they are eligible for at most 10% and 15% of the issue respectively.

Reason for the IPO

While the reasons for the Ola Electric IPO may become clearer once the RHP is released, the draft papers do give us some idea of how the proceeds from the issue may be utilised. 

It is expected that Rs. 1,226 crore from the proceeds of the listing will be directed towards expanding the capacity of the Ola Gigafactory. This is the company’s cell manufacturing plant, and the Ola IPO could be instrumental in taking its overall capacity from the current 5 GWh (gigawatt hours) to 6.4 GWh.

The Big Question: What is the Expected Valuation for the Ola IPO? 

Whenever any new IPO makes it to the headlines, the company’s valuation is one of the hottest topics among investors, experts and analysts alike. The Ola Electric IPO is no different. Initially, the company’s issue was touted to be valued at $5 billion. 

At this valuation, given the portions being sold off by the current shareholders, it was expected that Aggarwal could make around $78 million (or Rs. 650 crore) from the sale. Also, the offer-for-sale component was likely to bring in around $156.7 million (or Rs. 1,300 crore). 

This $6 billion figure was based on the company’s previous valuation in September 2023, when it raised $140 million in a funding round and was valued at $5.4 billion. However, in an unexpected twist, the Ola IPO is expected to be pegged at a value of $4.5 billion. This marks a discount of around 18% from its previous valuation in September last year

The exact forces driving the lower valuation are still unknown. However, the speculation is that the company is aiming to price the issue more attractively for investors in a bid to promote long-term growth and accelerate wealth creation. 

Conclusion

This sums up all we know so far about the Ola Electric IPO. In the coming weeks or months, more details regarding the pricing and the issue and closing date of the offer may be announced. As an interested investor, you need to keep yourself updated about these new details, so you can be prepared to bid in the IPO of Ola if you wish to invest in it. 

The Research 360 Platform powered by Motilal Oswal makes it easy to keep track of such crucial details. All you need to do is monitor the ‘upcoming IPO’ section on the platform to instantly be in the loop about any new details regarding the Ola Electric IPO. You can also use the platform to conduct in-depth research into other listed companies before investing in them. With easy access to research reports and stock market news, the Motilal Oswal Research 360 Platform is the one-stop solution you didn’t know you needed to make smart investment decisions.