Following its investment in Grab four months ago, Korean automotive firm Hyundai is in talks with Ola to invest up to $300 million, said three sources aware with the deal which has reached the second stage of negotiation.
“Both companies have held two rounds of talks and it’s likely to fructify in the next six weeks. The size of round may vary between $200 to 300 million,” said two of the three sources. Hyundai had invested $250 million in Grab in November last year.
Hyundai’s investment in the SEA ride-hailing and food delivery app is largely strategic than pure-play investment. The car maker has worked out a deal with Grab to include company’s owned Kia vehicles in ongoing EV pilots across SEA region.
“The deal if gets through will be on the lines of Grab deal. Importantly, the valuation of Ola would be expected to exceed $6 billion for the first time,” added the third source. Sources requested anonymity as the discussion is private.
The deal is strategically meaningful for Hyundai, given its emphasis on manufacturing electric vehicles in India. The firm is reportedly investing over $1 billion (approximately Rs 7,000 crore) in Sriperumbudur facility near Chennai (Tamil Nadu) to manufacture electric cars.
Hyundai also led $14.3 million Series B round in Indian car rental startup Revv in August 2018.
It’s worth noting that Ola Electric (its electric mobility arm) had recently scooped up $56 million (Rs 400 crore) from Tiger Global, Matrix Partners, and Sarin Family India LLC. The company had reportedly committed to bring 1 million electric vehicles in its fleet by mid-2021.
Queries sent to Ola’s spokesperson and Hyundai didn’t receive an immediate response. We will update the post as responses come in.
Investment from car manufacturers is not a new thing. Toyota had infused $1 billion in Grab last June and in an advanced stage to put $500 million in Uber for self-driving cars programme.
The deal if materialises will provide much-needed firepower to Ola that has been fighting Uber in the country. It would also give a spark to its proposed plan for electric mobility unit.
The deal with Hyundai will also help Bhavish Aggarwal to keep SoftBank at bay.
In a bid to protect the company from Masayoshi Son gaining controlling power over Ola, Aggarwal is not in favour to raise more capital from the Japanese investment giant. At present, SoftBank owns 26 per cent stake in Ola.