Ola Electric gets SEBI approval for IPO

Capital market regulator Securities and Exchange Board of India has approved Bhavish Aggarwal-led Ola Electric Mobility Ltd’s proposed initial public offering (IPO).

The IPO is a combination of a fresh issue and an offer for sale. The company plans to issue shares worth up to Rs 5,500 crore, while its existing investors, including founder Bhavish Aggarwal, will sell up to 9,51,91,195 shares.

India’s largest electric two-wheeler maker Ola Electric filed the draft red herring prospectus (DRHP) with the market regulator in December 2023, and SEBI issued an observation letter on that on June 10.

Currently, Aggarwal is the largest shareholder in the company with a stake of 36.9%, followed by SoftBank’s SVF II Ostrich (DE) LLC with a 22% stake. Aggarwal plans to offload 4,73,94,014 shares in the public issue while SVF II will sell 2,38,57,268 shares, according to the DRHP.

Ola Electric will use Rs 1,226.43 crore from its net proceeds for the expansion of cell manufacturing capacity at its upcoming Giga factory in Krishnagiri, Tamil Nadu, close to its vehicle manufacturing facility.

The automaker will also use Rs 1,600 crore from the proceeds for research and product development, and Rs 800 crore for debt repayment. The company’s total outstanding borrowing on a consolidated basis stood at Rs 1,768.82 crore, as of October 31, 2023.

Ola Electric is the market leader in the electric two-wheeler segment with over 30 percent market share, competing with Bajaj Auto, TVS Motor, Ather and Hero MotoCorp.

The automaker offers three electric scooters - S1 Pro, S1 Air and S1 X. The S1 X has three variants with battery capacities ranging from 2 kWh to 4 kWh. It also working on a portfolio of four electric motorcycles and is set to launch its first model in the first half of FY26.

In FY23, Ola Electric reported a consolidated net loss of Rs 1,472.08 crore and the company said it might continue to report losses in the near term, considering higher operating expenses on account of product and sales expansion.

Recently, Hyundai Motor India also filed a DRHP of an IPO that only has an offer-for-sale component. Its South Korean parent company Hyundai Motor Company plans to dilute up to 17.5% stake in the wholly-owned India unit by selling up to 14,21,94,700 shares in the offering.