In a significant move within India's burgeoning electric vehicle (EV) landscape, Bhavish Aggarwal-led Ola Electric has filed draft papers with the Securities and Exchange Board of India (Sebi) to launch an initial public offering (IPO) aiming to raise a substantial Rs 5,500 crore.
This proposed IPO marks a landmark event as it will be the first public offering by a two-wheeler manufacturer in India since Bajaj Auto's stock market debut back in 2008. Ola Electric, backed by Singapore's Temasek, has made waves in the EV sector and was valued at $5.4 billion in a recent funding round, showcasing its robust presence and market standing.
As the first offering by an EV maker in India, the IPO includes fresh stock issuance alongside CEO Bhavish Aggarwal's plan to sell up to 47.4 million shares, as indicated in the draft prospectus filed with Sebi.
Ola Electric currently commands a dominant position in India's electric two-wheeler segment, boasting a formidable 32% market share. Its competitors include industry stalwarts such as TVS Motor, Bajaj Auto, and Ather Energy, as per data from the Society of Manufacturers of Electric Vehicles (SMEV).
In light of the burgeoning IPO market in India, with a record 213 IPOs this year including big names like Tata Technologies and JSW Infrastructure, Ola Electric's move comes at an opportune moment, coinciding with the scaling of benchmark indexes to record highs.
However, amidst its formidable market presence, Ola Electric did record a consolidated loss of Rs 1,472 crore for the fiscal year ended March 31, even as its revenue from operations surged more than seven-fold.
Kotak Mahindra, Goldman Sachs, and Bank of America are among the lead managers to the IPO, which is set to follow the book-building process. This process stipulates that a proportionate allocation will be made to qualified institutional buyers (QIBs), non-institutional bidders, and retail individual bidders.
The IPO proceeds, as outlined in the Draft Red Herring Prospectus (DRHP), will be primarily utilized for various initiatives including capital expenditure for Ola Electric's subsidiary, OCT's Gigafactory project, debt repayment, research and product development, organic growth, and general corporate purposes.
While the EV industry in India undergoes significant growth, recent challenges have prompted Ola Electric to revise its sales projections for 2023-2025. Reduced government incentives leading to increased e-scooter prices have prompted a downward revision in sales goals. Ola now expects 300,000 e-scooter sales in the fiscal year to March 2024, a substantial reduction from its earlier projection of 882,000.
Despite these adjustments, Ola remains a key player in the Indian e-scooter market, showing resilience and adaptability amidst the evolving landscape. As the IPO plans unfold, Ola Electric's foray into the public markets is poised to reshape and redefine India's EV sector.
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