After getting SEBI approval a couple of months back, Ola Electric, the Bhavish Aggarwal-led electric vehicle company, is gearing up to launch its much-anticipated public offering within the next few weeks. The IPO, set to raise Rs 5,500 crore in fresh capital, will come at a discounted valuation of around $4 billion, a significant drop from its last private funding round. This move highlights a strategic adjustment in response to the evolving market dynamics and competitive pressures.
In September 2023, Ola Electric was valued at $5.4 billion following a $140 million investment led by Singapore’s Temasek. However, recent discussions with bankers and investors during the company’s roadshows have led to a revised valuation of $4 billion which is 25% lower than private companies. This decrease of about a fourth from its last private funding round reflects a cautious yet strategic approach as the company navigates the public markets.
The decision to adjust the valuation comes amid increased competition from industry giants Bajaj Auto and TVS Motors, which have launched new products challenging Ola Electric’s market dominance. Currently, Ola holds a 35% market share, a decrease from its peak of around 50%. This competitive pressure has likely influenced the company’s more conservative valuation.
According to its draft red herring prospectus filed in December, Ola Electric plans to facilitate an offer-for-sale (OFS) of 95.2 million shares. This IPO is expected to be one of the largest new-economy public offerings this year, signaling a revival of public market debuts by technology-first companies.
E-commerce firm FirstCry is also preparing for its IPO, while food delivery giant Swiggy has confidentially filed its draft papers with the market regulator. These movements suggest burgeoning confidence in the market for technology-driven enterprises.
Initially targeting a $6-7 billion valuation, Ola Electric has tempered its expectations to align with current market conditions. This pragmatic approach aims to ensure a successful public debut and sustainable long-term growth. By setting a realistic valuation, Ola Electric is positioning itself to attract a broad base of investors and build a solid foundation for future expansion.
