Ola Electric gets SEBI's nod for IPO worth ₹7,250 crore
What's the story
Ola Electric, a prominent player in the electric vehicle (EV) industry, has received approval from the Securities and Exchange Board of India (SEBI), for its initial public offering (IPO).
The company is aiming to raise ₹7,250 crore through this IPO, making it the first Indian EV two-wheeler manufacturer to take this step.
The firm submitted its draft red herring prospectus (DRHP) to the market regulator on December 22, 2023.
IPO details
IPO structure and stakeholder involvement
The IPO plan of Ola Electric includes a fresh issue of ₹5,500 crore and an offer for sale (OFS) of ₹1,750 crore, totaling ₹7,250 crore.
As per the DRHP, existing shareholders are set to sell 95.19 million stocks in the OFS.
Bhavish Aggarwal, the founder of Ola Electric, will sell 47.3 million shares, while initial investors such as AlphaWave, Alpine, DIG Investment, and Matrix will collectively sell 47.89 million stocks.
Utilization of funds
Measures for IPO proceeds and market dominance
Ola Electric intends to utilize the funds raised from the IPO for capital expenditure (capex), debt repayment, and research and development (R&D).
The company plans to spend approximately ₹1,226 crore on capex, ₹800 crore on debt repayment, and the largest portion of about ₹1,600 crore on R&D.
An additional ₹350 crore has been earmarked for inorganic growth.
The company currently holds a significant market share of around 52% in the EV two-wheeler market.
Financials
Ola Electric's financial performance and future IPO plans
Ola Electric's financial performance has been robust, with consolidated revenues reaching ₹2,782 crore in the financial year ending March 2023.
However, the company reported a net loss of ₹1,472 crore due to increased expenses.
For the first quarter of 2023-24, the company reported total income of ₹1,272 crore and losses of ₹267 crore.
Despite these losses, Ola Electric is planning a re-IPO placement of stocks worth ₹1,100 crore, which could potentially reduce the size of the fresh issue.