Acquisition of Avail Finance approved by IPO-bound Ola board
- ByStartupStory | April 11, 2022
Acquisition of Avail Finance, a company promoted by founder and CEO Bhavish Aggarwal’s brother, approved by the IPO-bound Ola’s board, for $50 million in a share swap deal, people familiar with the matter said, adding that post the merger, his sibling Ankush Aggarwal is likely to lead Ola Financial.
On March 25th, 2022, a report states that even as some investors were hesitant about signing off on the transaction because it involved related parties, prompting questions on probity and governance, the mobility platform is likely to buy Avail.
Ola’s parent ANI Technologies’ board of directors include Bhavish Aggarwal, Matrix’ Avnish Bajaj, Krishnamurthy Venugopala Tenneti, Tencent’s Brent Richard Irvin, SoftBank’s Sumer Juneja, co-founder Ankit Bhati, who Aggarwal counts as an advisor and former Vodafone CEO Arun Sarin, he is also a board member and investor in other venture of Aggarwal Ola Electric.
As the SoftBank-backed firm, which was planning to list on the public markets this year the merger came in, after a record 2021 that saw sky-high valuations in the public and private markets, to raise a new round of funding at a lower valuation, signifying a sharp reversal in fortune for startups has been planned by it.
The target company, Avail Finance was founded by Bhavish’s brother Ankush Aggarwal and Tushar Mehndiratta in 2017. It offers lending products such as personal loans, savings, salary advances, to blue-collar workers. To help Ola expand its fintech offerings the move is expected and to its driver partners it allows to offer credit. But sources said in order to survive and raise money as its business was hit during the pandemic Avail has been struggling, so the merger is nothing short of a lifeline.
Apart from Ola and Avail Finance also have common investors: Alpha Wave Global and Matrix Partners, both Bhavish and Ankush are directors of the firm. Currently, Ola holds 9% in Avail Finance and three years ago it had invested in the firm. With Ankush leading the Financial business going forward, Avail’s leadership will join Ola post the deal.
In order to merge his brother’s firm with Ola, Aggarwal’s move comes at a time when the firm has been battling multiple headwinds. It is looking to raise worth $150-$200 million at a valuation compared to its last round of $5 billion which happened at about $7 Billion as its IPO plans are delayed. From investors late last year, it is also yet to receive the $500 million loan that it raised.
In its Series J round, led by Edelweiss PE, IIFL, and Sunil Munjal-led Hero Enterprises, Ola was last valued at $7.3 billion when it raised $139 million in what seemed like the last round of funding before its IPO. It raised $500 million from Warburg Pincus and Temasek, before the $139 million, giving early backers Tiger and Matrix a part exit in the company.
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