Ola and Uber merger?: SoftBank to pave way out for Tiger in Ola, eyes 50% stake

Japanese investment firm Softbank is all set to take up its stake to 50 percent with fresh investment in India's ride-hailing firm Ola.

As per a Business Standard report, Softbank will acquire additional 10-12 percent stake in parent company of Ola, ANI Technology. It plans to provide around $400-500 million partial exit to US-based investment firm Tiger Global, which at present holds almost 21-22 percent stake in the ride-hailing firm.

On Monday, Tiger Global’s managing partner Lee Fixel has stepped down from the board of the company. Fixel headed Tiger Global’s private equity and venture capital operations.

Meanwhile, Softbank also finalised investment in Uber. According to industry experts, Ola and Uber may be merged once Softbank will have a commanding position in Ola.

In October, Ola raised $1.1 billion in a funding round led by Chinese internet major Tencent Holdings Ltd and existing investor SoftBank. The company also added that it is in advance talks with investors to close an additional $1 billion.

Previously, It had secured around $250 million from investors like Falcon Edge, an existing investor, Ratan Tata’s RNT Capital Advisors, and Tekne Capital Management. Microsoft Corp was also looking to invest $50-100 million for a small stake in Ola. However, the company tied up with Microsoft to build a new connected car platform for automobile firms.

Indian ride-hailing firm has leadership position in Indian market. Off late, Uber has been under pressure and launched many incentives and promotions to capture a greater share of India’s $10-billion ride-hailing market. Ola and Uber generate revenues from the commission that they charge drivers.

Founded in 2011 by IIT Bombay alumni Bhavish Aggarwal and Ankit Bhati, ride-hailing firm currently has a presence in around 110 cities in India. Apart from cab-hailing services, it offers India-centric categories like auto-rickshaws and bikes as well as vehicles equipped with the world’s only connected car platform for ridesharing, Ola Play. The company plans to charge customers slightly more for using Play and may look to generate revenues by serving ads on the platform.

According to regulatory documents, Ola posted revenue of Rs 758.23 crore in 2015-16, compared with Rs103.8 crore in the year-ago period. Losses nearly tripled to Rs2,313.7 crore from Rs796 crore in the same period.

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