Ola Electric’s upcoming initial public offering (IPO) plans to issue new shares to raise $660 million. Existing investors, including founder Bhavish Aggarwal, will sell approximately $80 million of their stakes to IPO investors. Retail investors will receive 10% of the IPO shares. The subscription opens on August 1 and closes on August 6. The issue comprises a fresh issue of Rs 5,500 crore and an offer for sale (OFS) of up to 84.94 million shares, with the OFS valued at Rs 645.96 crore at the upper price band. The total size of the issue amounts to Rs 6,145.96 crore.
The IPO is launching amid record highs in the Indian market. Ola Electric, which had a 35% market share in the electric two-wheeler (E2W) segment at the end of fiscal year 2024, saw an increase from 21% the previous year. The company operates a direct-to-customer (D2C) omnichannel distribution network across India with 870 experience centers and 431 service centers. In FY24, Ola Electric sold 329,000 units, doubling the 156,000 units sold in the previous year.
Investors such as Alpine Opportunity Fund VI LP and Tekne Private Ventures XV Ltd, who purchased shares at an average price of Rs 111.51 and Rs 113.12 respectively, are expected to face over 30% losses at the upper price band of Rs 76 per share. Bhavish Aggarwal, Ola Electric’s promoter, holds 1.36 billion shares, representing a 36.94% stake valued at Rs 10,350 crore at the upper price band. This stake was acquired at a negligible cost, according to the Draft Red Herring Prospectus (DRHP).
At the upper price band, Ola Electric’s market capitalization is approximately $4 billion (Rs 33,500 crore), which is a 25.8% decrease from $5.4 billion in September. This decline in valuation is attributed to a global tech correction and Ola’s strategy to increase participation.
Paytm founder Vijay Shekhar Sharma, film director Zoya Akhtar, and actor Farhan Akhtar, who acquired shares in Ola Electric in 2021, will not sell their holdings in the IPO. They have realized gains of 26% at the upper end of the offer price band of Rs 72-76 per share. Their acquisition price, adjusted for a bonus issue and conversion of preference shares, is Rs 60.36 per share. Sharma’s investment of Rs 7.5 crore is now valued at Rs 8.96 crore at the lower end and Rs 9.46 crore at the upper end of the price band. Zoya Akhtar and Farhan Akhtar hold shares acquired at prices of Rs 1.07 crore and Rs 2.14 crore respectively, while Ritesh Sidhwani of Excel Entertainment also holds shares.
Some pre-IPO investors may face potential losses due to the lower public issue price band compared to their acquisition price. This situation is uncommon for tech IPOs in recent years, where early investors such as Tiger Global and Matrix Partners typically see significant gains.
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