(Bloomberg) — Ola Electric Mobility Pvt. is seeking to raise 55 billion rupees ($661 million) by selling new shares in an initial public offering that will test investor confidence in the Indian startup whose ambitions extend to entering the electric car market.
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Ola is planning to use 12.3 billion rupees of the total proceeds for expanding the manufacturing capacity of its electric vehicle cell factory to 6.4 gigawatt hours from 5 gigawatt hours, according to a prospectus filed with Kotak Investment Banking. The company may also consider raising 11 billion rupees ($132 million) through a pre-IPO placement of shares, with Ola intending to repay debt and invest in research and development with the funds.
The IPO is part of the company’s ambitious plans to expand into battery-powered cars and EV cells. Founder Bhavish Aggarwal is building what he’s touting as the world’s largest electric vehicle hub in southern India for producing battery-powered two-wheelers, cars and lithium-ion cells, while the Bengaluru-based startup also launched its first electric motorcycle and cheapest scooter yet in August.
The cell factory will become operational by March with an initial output of 1.4 gigawatt hours, ramping up to 5 gigawatt hours by October, according to the prospectus. The company reported a revenue of 27.8 billion rupees in the financial year 2023, up 510% from a year earlier.
Ola, backed by SoftBank Group Corp. and Tiger Global Management, has grown to become India’s biggest electric-scooter company with a third of the market for battery-powered two-wheelers. It sold 188,438 scooters in the year through Dec. 18, according to data from the Society of Manufacturers of Electric Vehicles.
It’s a risky gambit, since two-wheelers are a bright spot in India’s otherwise sluggish switch to electric vehicles. Beyond scooters, the nation’s budget-conscious buyers are hesitant to shift to battery-powered cars due to their high price tags and a lack of charging stations. Electric cars accounted for just 1.3% of the total passenger vehicles sold last year, according to BloombergNEF.
And while Ola has succeeded in the scooter business, it will face intense competition in the car and EV cell markets. Established car manufacturers such as Tata Motors Ltd., and Mahindra & Mahindra Ltd. dominate the market, while Tesla Inc. is considering investing in India. Billionaire Mukesh Ambani’s Reliance Industries Ltd. is also planning to make batteries locally.
Ola in October raised 32 billion rupees through equity funding from investors led by Temasek Holdings Pte and debt for expanding its operations and setting up the 115-acre cell plant. Aggarwal has said localization of electric vehicle parts, such as cells, will give Ola more control of quality and costs in a market where most EVs are converted from gasoline models.
–With assistance from Abhishek Shanker.
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