Ola to acquire Bhavish Aggarwal’s brother-led company Avail Finance

Ride-hailing firm Ola has entered into an agreement to acquire Avail Finance, a financial services startup for the blue-collar workforce.

The acquisition will help the Bengaluru-based firm to expand its financial services offerings including neobanking, said Ola in a statement. The transaction, however, is still awaiting approval from shareholders.

As a part of the deal, Avail Finance’s leadership team will be joining Ola Financial Services. ANI Technologies, which is the parent company of Ola, owns 100% holding in Ola Financial Services.

While Ola did not disclose details of the transaction, a Moneycontrol report estimates that it will be a $50 million share swap deal. It appears to be a down round for the company which was valued at around $70 million during its last equity round (Series B) in August 2020. It also raised $3.24 million debt from Alteria Capital in May last year.

​​Founded by Ankush Aggarwal (brother of Ola’s founder Bhavish Aggarwal) and Tushar Mehndiratta in February 2017, Avail Finance caters to India’s blue-collared workforce who are currently underserved by organized lending institutions.

It provides collateral-free personal loans of up to Rs 20,000 to meet their financial needs. According to the company, there is no interest for a personal loan of Rs 5,000 for a month.

It’s worth noting that Bhavish Aggarwal is a director on the board of Avail Finance and has invested in the Bengaluru-based company along with Ola and several angel investors including Ankit Bhati, Kunal Shah, Binny Bansal and Manish Patel. Ola currently owns 9% stake in Avail Finance whereas Matrix Partners and Alpha Wave are common investors in both companies.

Last year, a report by Mint highlighted that Avail Finance had been using its own money to lend, circumventing a key RBI rule that allows only banks and licensed non-banking financial companies (NBFCs) to lend.

Avail Finance’s struggle can also be gauged from its financial performance in the last fiscal year. The company’s revenue from the operations saw a decrease of 20% to Rs 4.48 crore in FY21 from Rs 5.59 crore in FY20, as per its regulatory filings.  During the period, its expenses shrank 31.79% Rs 39 crore in FY21, however, the losses remained almost similar i.e. Rs. 37.21 crore in FY21 and Rs 37.48 crore in FY20.