Steadview Capital invests $74M in Ola valuing it at around $6B

Hedge fund Steadview Capital has invested over Rs 520 crore (about $74 million) in ride hailing major Ola. This is a part of the Bengaluru-based company’s ongoing financing round valuing it between $5.5- $6 billion, the highest it has commanded till date.

As part of the Series J transaction, Hong Kong and London-based Steadview Capital, which had last participated in Ola’s 2015 fundraise, has now received 245,082 preference at a subscription price of Rs 21,250 per preference share, according to documents filed with the Registrar of Companies, and accessed by business signals provider Paper.vc.

ET was the first to report in its edition dated October 31 that the Ravi-Mehta-led investment firm was finalising an investment in the Bengaluru-headquartered Ola.

The latest investment follows reports of the company raising Rs 14 crore, again through the issuance of preference shares, from China’s Eternal Yield International earlier this month.

Ola’s founder Bhavish Aggarwal has been looking to bring in fresh investors, including Temasek, the investment firm backed by the government of Singapore. The cab-hailing firm has been trying to contain the influence of SoftBank, its largest institutional stakeholder in the company.

This is also the latest investment by Steadview Capital, which has been on a deal making spree over the course of 2018, after having been relatively dormant since 2015. The last few months have seen the investment firm rack up its India-specific portfolio, investing in INDWealth, UrbanClap and Urban Ladder.

Separately, last month, ET, citing sources, had reported that SoftBank had offered to invest as much as $1 billion in a new financing round for Ola, as the ride-hailing company plans to aggressively grow its food delivery business.

Further the taxi aggregator may invest in areas such as e-pharmacy. It’s not clear right now whether Ola’s cofounder Aggarwal will accept more capital from SoftBank and allow the investor to ratchet up its shareholding from about 26% at present. However, he may consider a smaller amount from the Japanese investor, sources had told ET earlier.

SoftBank’s proposal to back Ola with such a huge sum is significant because it comes after the most influential tech investor globally had attempted to buy additional stake in the company from Tiger Global in 2017.These discussions happened without Aggarwal’s consent as has been reported earlier. Since then Ola founders have altered their rights to safeguard the company from a possible sale or merger.

While Aggarwal has been shoring up his rights against SoftBank and adding allies to the company board since last year, there is now also a thaw in the relationship with its largest shareholder.

Ola has already ensured funding from Flipkart cofounder Sachin Bansal and existing backer Steadview Capital. These infusions will total up to around $200-250 million. Singapore’s sovereign wealth fund Temasek is also likely to infuse primary capital in the company as part of the ongoing financing round.

Additionally, India’s ride-hailing space has been witnessing a slowdown. ET had reported in its September 24 edition, that Ola and Uber, while increasing their absolute number of daily rides, saw growth decline to 20% on average in 2018 to 3.5 million rides across all segments, including taxis, autorickshaws, and shared cabs.

That compares with 57% growth to 2.8 million rides a day in 2017 and 90% to 1.9 million in 2016. The data pertains to Ola and Uber.

The company saw its losses widening to Rs 4,897.8 crore, even though its total income grew 70% during FY2016-17 as compared to the previous fiscal, as per regulatory documents. Ola had registered a loss of Rs 3,147.9 crore in FY2015-16.

During the same period, ANI Technologies -- the entity running Ola -- saw its consolidated total income rising over 70% to Rs 1,380.7 crore as against Rs 810.7 crore in FY2015-16, as per documents filed with Registrar of Companies, and accessed by business intelligence platform Tofler.