The ride-hailing firm Ola was very high on its international expansion plan last year. The Bengaluru-based ride-hailing firm wanted to foray into as many as 50 global cities, including European and Gulf cities, by 2019.
Ola overseas expansion kicked off with Australia in January 2018. This was followed with its entry in the United Kingdom and New Zealand. The next destinations in line were Netherlands, Kenya, Dubai, Israel, Brazil, Northern, and Eastern Europe. These are markets where Ola eyed to foray into this year.
But after the initial euphoria on the overseas market, it has slowed down the global expansion plan.
Ola may be preparing to hit pause on its international market expansion as it is looking to raise mega round (of $2 billion round), said Business Standard report quoting people aware of the development.
This is the second time that ride-hailing firm has gone back on its overseas expansion plans. Earlier, its subcontinent expansion plan reportedly also had the same fate in Bangladesh and Srilanka .
This is primarily because the firm has failed to raise a bigger round from new investors. Ola’s founder Bavish Agarwal is still struggling to bring in new and aligned investors as he doesn’t want to take more money from Softbank, which already has 26% stake in Ola.
Besides, Ola rival Uber recent below-par show in IPO has also made investors wary of good returns from ride-hailing firms. Uber last three-month report showcased a mere 9% growth on a global scale.
In India, the ride-hailing growth rate has also seen a slump this year. In the last six months, the number of daily rides has gone up by just 4% – from 3.5 million to 3.65 million. The cut down on drivers commission has also contributed to the ride-hailing firm woes.
However, Ola has denied that it has slowed down investment and said to continue investing in these markets.
According to RoC filings, Ola has poured in about $60 million into its international operations over the last 15 months. Ola’s through international expansion aims to clock higher revenues with lesser burn in these developed markets.
Agarwal-led firm overseas business is expected to contribute over one-third of its consolidated revenue by the end of this financial year. If this has to be true, then Ola needs to raise money and continue its international expansion.