Ola in talks to bring IIFL, Edelweiss on board in a pre-IPO round at $7 bn valuation

Ride-hailing giant Ola is in talks to bring in two new investors - IIFL Wealth Management and Edelweiss Private Equity - to its cap table in a pre-IPO round, according to a person aware of the development.

The discussions are ongoing to raise upwards of $250 million at a valuation close to $7 billion. The round will be led by the aforementioned investors with participation from Ola’s existing backers including SoftBank Group Corp., Temasek Holdings and Warburg Pincus. Returning investors might invest in the company on a pro rate basis to avoid diluting their stake with the new round, the person mentioned above said.

The talks are in a very early stage and a deal is far from done, he added.

The development was first reported by The Economic Times.

According to various media reports, Ola is expected to file for a $1 billion IPO and will list on the domestic stock exchanges in FY22.

In July, the Bengaluru-based company said it raised an IPO round of $500 million led by Temasek and Warburg.

 

Early this month, Ola’s parent ANI Technologies reported a revenue drop of 62 per cent on a year-on-year (YoY) basis. Its total income on a consolidated basis stood at Rs 1,039 crore in FY21 as against Rs 2,721 crore during FY20.

The company attributed the revenue decline to COVID-19 pandemic, which had a serious impact on the mobility business of Ola.

It managed to bring down losses by curtailing employee expenses, and advertising spends, due to which the losses before tax on a consolidated basis were reported at Rs 839 crore in FY21 as against Rs 2,213 crore a year ago, (nearly 62 per cent dip).

On a standalone basis, Ola’s income fell by 63 per cent to Rs 77.2 crore in FY21 compared to Rs 2,073 crore in FY20.

Ola said that in a year of crisis, the company has come out financially stronger and has improved its ENTR (Effective Net Revenue) by 4.7 per cent, and also by bringing direct cost lower by 0.6 per cent. This led to EBIDTA turning profitable at Mobility level.

In the auto ride business, the Bhavish Aggarwal-led firm said that the bookings recovered to 100 per cent of the pre-COVID-19 levels in August 2021 through a flat commission model which helped the partner drivers earn better.

The company said that it is currently adding 1.1 million new users in India mobility every month organically (without any marketing money being spent). There are 4.88 lakh transacting driver partners in August 2021 vs 6.24 lakh in February 2020 and 3.45 lakh in August 2020.

Monthly transacting users jumped from 4.5 million in August 2020 to 11 million in August 2021, as per Ola’s regulatory filing.

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