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Ola Electric Charges Ahead with IPO Worth Rs 5,500 Crore

Published 20-06-2024, 02:03 pm
© Reuters.

Ola Electric, India's top electric two-wheeler manufacturer, has received approval from the Securities and Exchange Board of India (SEBI) to launch its initial public offering (IPO). This marks a significant milestone as the first IPO by an electric vehicle (EV) startup in India and is expected to be one of the largest public offerings in 2024.

The Bengaluru-based company aims to raise up to INR 5,500 crore through a fresh issue of equity shares. Additionally, the IPO will include an offer for sale (OFS) of 95.2 million shares by promoters and existing investors, according to the draft red herring prospectus (DRHP) filed with Sebi in December 2023. Prominent stakeholders, including Ola Electric’s founder Bhavish Aggarwal, will divest part of their shares in the OFS.

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The proceeds from the fresh issue are earmarked for multiple strategic initiatives. A significant portion will fund capital expenditures for Ola’s Gigafactory project, a large-scale EV manufacturing facility. Additional funds will be used to repay debt, enhance research and product development, support organic growth initiatives, and cover general corporate expenses.

Ola Electric manufactures electric vehicles and core components, such as battery packs and motors, at its state-of-the-art Ola Futurefactory in Krishnagiri, Tamil Nadu (NS:TNNP). The company is also developing an EV hub in the Krishnagiri and Dharmapuri districts, which includes the Futurefactory, the upcoming Ola Gigafactory, and co-located suppliers.

Since launching its first EV model, the S1 Pro, in August 2021, Ola Electric has quickly risen to become the best-selling electric two-wheeler (E2W) manufacturer in India. The company achieved this milestone within nine months of delivering its first scooter, as recorded on the VAHAN Portal of the Ministry of Road Transport and Highways. For the fiscal year 2023, Ola Electric's revenue from operations soared over sevenfold to INR 2,630.93 crore from INR 373.42 crore the previous year.

The IPO is managed by a consortium of leading financial institutions, including Kotak Mahindra (NS:KTKM) Capital Company, Citigroup Global Markets India, BofA Securities India, Goldman Sachs (NYSE:GS) (India) Securities, Axis Capital, ICICI Securities (NS:ICCI), SBI (NS:SBI) Capital Markets, and BOB Capital Markets. Ola Electric's equity shares are set to be listed on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).

A notable portion of the IPO funds, around INR 1,264 crore, will be directed towards expanding the capacity of the Ola Gigafactory. Furthermore, INR 800 crore is allocated for debt repayment, while INR 350 crore will support organic growth initiatives. Ola Electric has also earmarked INR 1,600 crore for research and development over the next three years to maintain its competitive edge and foster innovation in the fast-evolving EV market.

Ola Electric's IPO represents a significant step in its growth trajectory, enabling the company to enhance its manufacturing capabilities, reduce debt, and invest in future innovations. This move positions Ola Electric not only as a leader in the Indian EV market but also as a significant player on the global stage.

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