Ola Electric to launch IPO, looks to raise Rs 5,500 cr via fresh share sale

The Indian entrepreneurship success story will soon see one more company debuting on the public markets. Ola Electric, the electric vehicle (EV) company, has become the first such firm that has filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India for its initial public offering (IPO).

This is a fresh issue of equity shares of up to Rs 5,500 crore and an offer for sale (OFS) of more than 95 million equity shares at a face value of Rs 10.

Ola Electric’s issue size is bigger than the IPOs that hit the markets in 2023. The biggest this year was that of Mankind Pharma, which raised Rs 4,326 crore. Earlier, the Life Insurance Corporation raised over Rs 5,500 crore, ringing up Rs 20,557 crore; it was listed on May 17 last year.

Ola’s founder and chief executive officer, Bhavish Aggarwal.

will sell up to 47.4 million shares in the IPO. The other selling shareholders include Indus Trust, Alpine Opportunity Fund, DIG Investment, Internet Fund III (Tiger Global), MacRitchie Investments, Matrix Partners, SoftBank Vision Fund, Alpha Wave Ventures and Tekne Private Ventures.

The IPO is unique for a few reasons. This will be the first in decades since a two-wheeler manufacturer hit the public markers.

This is the first issue by an automaker in the country in more than 20 years.

Ola Electric, which made its foray into the EV segment in 2017, has a 32 per cent market share and is a leading player. It is giving tough competition to older players.

The IPO comes at a time when the company has reduced its sales goals for 2023-25 by more than half and delayed its target of achieving profits by a year, according to a Reuters report earlier this month.

According to the DRHP, the proceeds from the fresh issue will be used for capital expenditure to be incurred by the subsidiary, OCT, for the Ola Gigafactory project.

It will use the investment in research and product development.

Aggarwal, who is compared to Elon Musk, has famously said he intended to end the ICE (internal combustion engine) age with EVs.

His ambition does not end with manufacturing just an EV two-wheeler. He has hinted at launching four-wheelers.