Ola Electric has raised $100 million in long term debt from Bank of Baroda in what appears to be the largest long-term debt financing agreement in the Indian EV industry.
According to Ola Electric, the proceeds will go towards the funding and financial closure of the first phase of development of its Chennai-based manufacturing factory of its electric two-wheelers.
In December 2020, the Bhavish Agarwal-led company had announced that it would be investing Rs 2,400 crore to set up Phase 1 of the factory.
“Today’s agreement for long term debt financing between Ola and Bank of Baroda signals the confidence of the institutional lenders in our plans to build the world’s largest two-wheeler factory in record time,” said Aggarwal, Chairman & Group CEO of Ola.
The fresh debt financing round has come after a gap of more than 20 months for Ola Electric. In late 2019, Korean carmakers Hyundai Motor Company and Kia Motors Corp had invested around $300 million in Ola and Ola Electric.
According to Entrackr’s sources, Ola Electric is also planning a larger equity round in which Temasek is likely to invest $120-150 million. Singapore-based Temasek, which is already an investor in Ola, had also participated in the ride-hailing company’s $500 million financing round. Warburg Pincus’s Plum Wood and Aggarwal also participated in the pre-IPO round of Ola.
Ola Group’s CFO GR Arun Kumar recently said that the delivery of e-scooters will start in August. The electric arm of the company also claims to have a capacity of manufacturing 10 million electric vehicles annually.
Ola Electric is the first startup to turn into a unicorn in the electric vehicle space. The company made an entry into the manufacture of two-wheelers with the acquisition of Amsterdam-based electric scooter manufacturer Etergo in May 2020.
Last year, Ola and Ola Electric had also faced around half a dozen back to back exits of top-level employees. The list includes Sanjay Bhan, Ola Electric’s chief business officer, Arun Srinivas, COO and global chief marketing officer of Ola, Naroo Krishnan, head of products at Ola Mobility, Sanjiv Saddy, senior VP at Ola and Sanjay Kharb, vice president for engineering at Ola.