Indian e-scooter maker Ola Electric will submit the necessary application papers for its alleged $700 million IPO (Initial Public Offering) before October ends, Reuters reports, citing three sources “with direct knowledge” on the matter.
For context, Ola Electric’s market valuation hit $5.4 billion in its latest fundraising. Notably, it has some major investors, including Singapore’s Temasek and Japan’s SoftBank. Of the $5.4 billion total, $700 million will reportedly go into its first IPO.
What’s an IPO?
Forbes Advisor explains that private companies register their shares on the stock exchange to offer them publicly for purchase in an IPO.
These companies hire an underwriter (usually an investment bank) to aid them in establishing an initial price for the offering.
“The underwriter puts together a syndicate of investment banking firms to ensure widespread distribution of the new IPO shares. Each investment banking firm in the syndicate will be responsible for distributing a portion of the shares.”
Robert R. Johnson, Ph.D., chartered financial analyst (CFA) and professor of finance at the Heider College of Business at Creighton University
Simply put, going public enables investors to cash out their investments in the company. It also aids the company in raising the necessary funds for its operations.
Report highlights
A company executive reportedly asked external IPO advisers, such as India-based Kotak and ICICI’s banking subsidiaries and foreign banks BofA and Goldman Sachs, to guarantee “utmost priority” to hit the five-week timeline. They also requested bankers and lawyers to avoid any extended leaves to guarantee availability.
According to the unnamed sources, the planned IPO has an internal codename, “Project Himalaya.”
They further asserted that the regulatory papers will immediately undergo the Indian market regulator’s assessment as soon as they are submitted.
As per one of the sources, the e-scooter maker aims to launch IPO roadshows in early 2024.
Ola Electric’s local presence
Ola Electric currently has a market share of 30% in India’s electric scooter segment. Founded by Bhavish Aggarwal, it took advantage of the country’s growing adoption of clean energy vehicles such as e-cars and scooters.
The local brand boasts that its $1,080 e-scooters are best for the masses. Founder Aggarwal even asserted in his previous interview that “Tesla is for the West, Ola is for the rest.”
However, it also suffered from a $136 million operating loss in the fiscal year ending in March 2023.
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Ola Electric has yet to finalize the IPO’s specific timeline. An actual IPO listing may occur in a few months. Nonetheless, the company aims to commence roadshows by January or February 2024.
