Exclusive: Ola set up ‘Pre IPO Trust’ as it targets public listing in 2 years

Number of Unicorns is growing in India. About half a dozen consumer Internet companies had raised fundings over $1 billion since 2018. The list includes the likes of BYJU’s, Dream11, BigBasket and Ola Electric. While we have over a dozen Unicorns in B2C segment, none of them even remotely ready for public listing if you look at their balance sheets. 

Ola seems to be an exception as it started putting things together for public listing in the next 18-20 months. The first hint towards its concrete IPO plan underway is investment Ola received from a special purpose vehicle (SPV): ARK Ola Pre IPO Trust. 

According to filings with MCA, Ola’s parent ANI Technology has received Rs 35.88 crore from ARK Ola Pre IPO Trust. The company issued 16,885 Series J CCPs to the SPV which is based out of Seoul. 

While Entrcakr didn’t succeed to garner details of the South Korean entity, it seems that Hyundai’s Asset Management arm has helped Ola in creating the above mentioned SPV. The ARK Ola Pre IPO Private Investment Trust is supported by Seoul based asset management firm ARK Impact, whose board of directors include Mr Jae-Hun Jung, a senior Hyundai executive.  

As the name suggests, the SPV is likely to be used by Ola for managing pre-IPO rounds of private investment amongst others. Multiple Entrackr sources, including a couple of company’s senior executives, have confirmed that the company has started working on a plan for public listing. 

“If you factor in Ola lobby for flexible listing norms for startups and creation of a SPV around the same time, it is visible that the company has been working on an IPO,” said three of the five sources. They requested anonymity as revelations can hamper their interest with Ola

Ola along with Lenskart and PolicyBazaar have rallied for relaxation of listing norms, particularly regarding conditions of holding 20% stake by the promoter, three years lock-in period for investors and amending parameters to ascertain founders’ net worth. 

Sources also emphasise that Ola has set up an initial team of about a dozen employees to work dedicatedly for IPO preparations. Ola has been making money on each ride since early last year.

Detailed queries sent to Ola on Friday didn't receive any response till the publication of the story. We will update the post as and when the company responds.

“The company is expected to start making an actual profit by the second quarter of FY21. Mobility business is almost at a break-even level at the moment, but losses in financial and food tech services are causing losses,” added sources. They assert that Ola has downscaled the loss-making Foodpanda and has set a definitive target for the financial services unit to turn profitable.

According to a two-year-old valuation report of Ola, it was projected that the firm would have an operating cash outflow of Rs 762.23 crore in FY18. On the contrary, Ola’s audited financial report for FYI8 showed an actual cash outflow of Rs 2,217.3 1 crore. 

Nevertheless, it showed a significant reduction of ~ 35% in terms of cash outflow as compared to Rs 3,414.67 in FY17. The company controlled losses by 42% to Rs 2842.26 crore in FY18. It reflects that the company is moving towards achieving profitability through efficient deployment of resources.

While Ola’s co-founder and CEO Bhavish Agarwal had claimed to turn profitable in FY19, the company is yet to file its financial statements for the last fiscal.