Ola To Raise $300 Mn To Fund Expansion Of Scooter, And Battery Cell Plants

Ola Electric is looking to raise $300 million from West Asian, and US-based global private equity funds at a $7-8 billion valuation. This move will dilute the shareholding of the promoters marginally from 40 per cent currently to around 37- 38 per cent, say sources involved in the deal.

Once the deal is through, Softbank, the first investor to invest money in Ola Electric, will see its equity diluted to below 20 per cent. Sources say that they are not expecting any secondary sale of shares by its current investors. An Ola spokesperson declined to comment on the issue.

Sources add that the fundraising has just started, and Ola Electric will get into discussions and finalise term sheets in the next few months. Founder Bhavish Aggarwal has been jet-setting across the globe to strike the deals.

The timing has been chosen as Ola Electric's electric two-wheeler (E2W) business has already turned EBIDTA positive. This can be leveraged to fetch a valuation premium, though other businesses like the battery cell business are in the investment phase.

The company will use the money raised to expand the two-wheeler plant, which has a capacity of 0.5 million to 1 million per annum. It will also fund Ola's battery cell factory, which is being set up under the government's production-linked incentive (PLI) scheme.

Before this fundraising exercise, Ola had raised $200 million in January 2022 from Tekne Private Ventures, Alpine Opportunity Fund, and Edelweiss, among others. The company was then valued at $5 billion.

With a market share of over 20 per cent, Ola Electric is already the largest E2W company in the country and has already sold over 200,000 e-scooters.

Recently, the company faced flak on social media related to the build quality of its e-scooters' front fork. Aggarwal responded to the criticism in a blog where he challenged the allegations and argued that while Ola focused on products and customers, its competitors focused on Ola. The company also offered to replace the front fork of all its e-scooters if the customers desired. Aggarwal said the company's balance sheet was strong enough to take the hit from the replacement.