Bengaluru-based electric vehicle maker Ola Electric is preparing for its initial public offering (IPO). The company has set the price band for the IPO at Rs 72-76 per share. The subscription period will be from August 2 to August 6.
Significance of the IPO
This IPO marks the first by an Indian electric vehicle manufacturer. Ola Electric aims to raise Rs 6,145.6 crore (approximately $740 million). This IPO is expected to be one of India’s largest for the year.
Investment Details and Stakeholders
Pre-IPO investors in Ola Electric, including Alpine Opportunity Fund VI LP and Tekne Private Ventures XV Ltd, might face losses since their purchase prices are higher than the current price band. Alpine Opportunity Fund bought shares at an average price of Rs 111.51, and Tekne Private Ventures XV at Rs 113.12. This could result in over 30% losses for these investors. Alpine’s 21.42 million shares are now valued at Rs 163 crore, and Tekne’s 36.32 million shares are valued at Rs 276 crore at the upper price band.
In contrast, early investors like Tiger Global and Matrix Partners are set to gain significantly. Tiger Global’s Internet Fund III Pte Ltd acquired shares at Rs 11.7 each, and Matrix Partners India Investments III at Rs 8.22 each, resulting in returns of 550% and 824%, respectively.
Bhavish Aggarwal to Sell Shares
Ola Electric’s founder Bhavish Aggarwal and Indus Trust will be selling 3.79 crore and 41.79 lakh equity shares, respectively, in the offer-for-sale. SVF II Ostrich (DE) LLC, the largest shareholder with a 21.98% stake (or 8.1 crore shares post-conversion of CCPS), will sell 2.38 crore shares in the offer-for-sale.
IPO Structure and Reservation
The IPO includes a fresh share issue of up to Rs 5,500 crore and an offer-for-sale (OFS) of up to 84.94 million equity shares by promoters and existing shareholders. The shares will be listed on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) on August 9. Retail investors will have 10% of the IPO reserved for them, 75% for qualified institutional bidders, and 15% for non-institutional investors.
Usage of IPO Proceeds
The proceeds from the IPO will be used for various purposes:
- Rs 1,227.64 crore for capital expenditure
- Rs 800 crore for repayment of borrowings
- Rs 1,600 crore for research and development
- Rs 350 crore for organic growth
- Additionally, the company has reserved shares worth Rs 5.5 crore for eligible employees, who will receive a Rs 7 per share discount.
At the upper price band, Ola Electric’s valuation is Rs 33,522 crore (about $4 billion). This is a decrease from its previous $5.4 billion valuation in September 2023.
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