Ola to raise $300M for scooter and battery plant expansion
- ByStartupStory | March 22, 2023
Sources with knowledge of the matter have disclosed that Ola Electric, the electric vehicle manufacturer, is nearing the completion of a funding round of approximately $300 million to facilitate its expansion plans and meet other corporate requirements. This new round of fundraising is taking place as there are indications that Ola Electric will achieve profitability soon and become financially self-sustaining.
According to sources familiar with the matter, the investment bank Goldman Sachs will oversee the fundraising efforts, which are expected to attract investments from existing and reputable global investors, as well as sovereign funds.
Ola Electric, which has nearly achieved a yearly revenue of $1 billion, has emerged as a leading Indian electric vehicle manufacturer in terms of volume and revenue, just a year after the launch of its electric scooters, the Ola S1 and Ola S1 Pro.
Ola Electric has been executing its strategy to develop crucial technologies, such as cell manufacturing, and is aiming to broaden its product range to include both two-wheelers and four-wheelers.
Upon the completion of the deal, Softbank’s equity in Ola Electric is expected to be diluted to under 20%, as per sources familiar with the matter. The sources also mentioned that there are no indications of any of the company’s existing investors engaging in a secondary sale of shares. An Ola spokesperson has declined to comment on the matter.
According to sources, the fundraising process for Ola Electric has recently commenced, and the company is expected to engage in discussions and finalise the terms in the upcoming months. The founder of Ola Electric, Bhavish Aggarwal, has been travelling extensively to various parts of the world in pursuit of securing the deals.
The decision to pursue fundraising at this time is strategic, as Ola Electric’s electric two-wheeler (E2W) segment has already achieved positive earnings before interest, taxes, depreciation, and amortization (EBITDA). This success can potentially lead to a higher valuation for the company, despite other ventures such as the battery cell business being in the investment phase.
Prior to this current fundraising initiative, Ola Electric had secured $200 million in January 2022, with participation from Tekne Private Ventures, Alpine Opportunity Fund, and Edelweiss, among other investors. At that time, the company was valued at $5 billion.
As the leading electric two-wheeler (E2W) company in India, Ola Electric holds a market share exceeding 20% and has already sold more than 200,000 e-scooters.
Sources have disclosed that Ola Electric has plans to expand its current two-wheeler factory, in addition to setting up the world’s biggest EV hub at a single site in Krishnagiri, as per a memorandum of understanding signed with the Tamil Nadu government. This facility will house the company’s cell factory, four-wheeler factory, and supplier ecosystem.
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