Ola Electric is in late-stage discussions to raise over $300 million in fresh financing from a new investor along with the participation of existing backers, said three people aware of the details of the transaction.
“Temasek has entered into advanced discussions to participate with $120-150 million whereas the remaining sum would come from existing investors SoftBank and Tiger Global,” said one of the sources on condition of anonymity.
According to sources, the three-and-a-half-year-old firm will be valued at over $1.7 billion in this new round. Ola Electric had been valued at $1 billion with a $250 million round led by SoftBank in July 2019.
The talks have emerged at a time when Ola Electric is busy building what it claims to be the world’s largest electric scooter manufacturing facility in Krishnagiri in Tamil Nadu. The company’s CEO Bhavish Aggarwal recently said that Ola Electric will produce 10 million scooters a year by mid-2022.
SoftBank and Temasek have declined to offer comments for the story. Queries to Ola Electric and Tiger Global remained unanswered at the time of publishing the story.
“Besides investing in Ola Electric, Temasek is also buying secondary shares from some early backers in Ola,” said the second person who also wished not to be named. “The size of the transaction is in the range of $40-50 million but it could go up as well.”
It’s worth noting that Temasek, which is owned by the government of Singapore, had also bought $225 million worth of shares in Ola in a secondary transaction in August 2018. While the valuation of Ola in the fresh secondary round couldn’t be ascertained, it’s likely to materialize at a significant hair cut.
According to The Capital Quest report, American investment firm Vanguard Group had recently cut the value of its investment in Ola by almost half to $3 billion from its $6 billion peak valuation before the pandemic. The pandemic had disrupted its business for the first five to six months in the ongoing fiscal. Although the company has been recovering, it’s yet to achieve a pre-covid peak, as per industry sources.
Temasek didn’t offer any comment on Entrackr’s specific queries on potential secondary share purchase. Response from Ola is still awaited.
Mobility startups have been one of the worst-hit sectors by the coronavirus pandemic. Ola, Uber, Rapido, Bounce and Zoomcar had several cost-cutting measures including layoffs. Ola let go over 1,400 employees while Uber downsized its staff size by 6000. Amidst pivoting to a pure-pay electric fleet, Bounce had laid off a majority of its workforce in the past six to nine months.