Nikhil Kamath Acquires Significant Stake in Ather Energy from Sachin Bansal

• ByStartupStory     |    April 23, 2024

Ather Energy, the electric two-wheeler manufacturer, is on the brink of a substantial fundraising endeavor. As per reports obtained from sources familiar with the matter, the company is in advanced discussions to secure a sizable infusion of funds through a blend of primary and secondary share sales.

Notably, the erstwhile investor and co-founder of Flipkart, Sachin Bansal, has divested a substantial portion of his holding in Ather Energy to Nikhil Kamath, co-founder of Zerodha. There are indications that Kamath may further augment his stake in the company by acquiring Bansal’s remaining shares.

Simultaneously, Ather Energy is ironing out plans to raise a substantial sum ranging between $75-90 million in primary funding from its existing investors. This development underscores the escalating interest of investors not only in Ather Energy but also in the broader mobility segment.

According to one of the sources, “The primary funding round construct is yet to be finalized but it is likely to be around $75-90 million in total.”

The impending funding round may witness the leadership of an existing investor and could potentially value Ather Energy in the range of $850 million to $1 billion, as per insiders privy to the discussions.

In a conversation with ET, Nikhil Kamath expressed his confidence in the venture, stating, “Among my private equity investments, this will be among the largest bets that I have made… I truly believe in the product and I am looking to have a good amount of exposure to Ather for the next decade.”

Sachin Bansal, upon inquiry by ET, declined to offer any comments regarding the transaction.

Ather Energy’s fundraising initiative follows its decision to defer funding plans last year due to unfavorable market conditions. Instead, the company successfully raised Rs 900 crore in September 2023 through a rights issue involving investments from Hero MotoCorp and GIC. The company counts National Investment and Infrastructure Fund and Tiger Global among its other investors.

The recent infusion of funds comes against the backdrop of Ather Energy’s unveiling of a new range of scooters dubbed ‘Rizta’, targeting the family segment. The company, with a current production capacity of 450,000 scooters annually, aims to expand production beyond the existing 150,000 vehicles per year after the launch of Rizta.

As reported by ET, the surge in investor interest in mobility companies is attributed to the resurgence in demand for ride-hailing and electric scooters post the Covid-19 pandemic.

Rapido, a Bengaluru-based mobility firm, is also eyeing a substantial raise of around $100 million in fresh funding. Additionally, Ola Electric, a direct competitor to Ather Energy in the electric scooter market, has filed its draft papers for an IPO, aiming to raise up to Rs 5,500 crore at an expected valuation of $7-8 billion.

The robust investor interest in sectors like electric mobility comes amid a 30% increase in electric two-wheeler sales during the financial year 2023-24, despite a reduction in government subsidies leading to price escalations. While Ather Energy maintained its market share at around 11%, players like Ola Electric, Bajaj, and TVS Motors saw an expansion in their market shares.

Furthermore, the ride-hailing segment is witnessing heightened activity, with players like Rapido and Namma Yatri venturing into the taxi-hailing segment, traditionally dominated by incumbents Uber India and Ola.

According to reports from ET, Uber reported a 54% surge in operating revenue in India to Rs 2,666 crore in 2022-23, while Ola Cabs witnessed a 58% increase in total revenue to Rs 2,135 crore during the same period, despite continued losses.

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