SEBI approves Ola Electric’s historic IPO, aiming to raise Rs. 5,500 Crore 

The Securities and Exchange Board of India (SEBI) has granted approval for the initial public offering (IPO) of Ola Electric, the country’s largest electric two-wheeler manufacturer. This IPO will mark a significant milestone as the first by an EV startup in India and is poised to be one of the most substantial new-age IPOs of 2024. 

Backed by prominent investors such as SoftBank and Temasek, Ola Electric filed its draft red herring prospectus (DRHP) with SEBI on December 22. The company aims to raise up to ₹5,500 crore through a fresh issue, alongside an offer for sale (OFS) of up to 9.52 crore shares. Ola Electric’s promoter, Bhavish Aggarwal, will be offloading 4.7 crore shares through the OFS, representing half of the total OFS. 

The DRHP also outlines the company’s option to raise ₹1,000 crore via a pre-IPO placement, which would subsequently reduce the fresh issue size by the same amount. Other stakeholders, including Indus Trust, Kaha Wave Ventures, Alpine Opportunity Fund, DIG Investment Internet Fund, MacRitchie Investments, Matrix Partners India Investments, SVF II Ostrich, and Tekne Private Ventures XV, will also divest their stakes as part of the offering. 

The proceeds from the IPO will be allocated for various strategic purposes. A portion will be used to repay loans owed by subsidiaries to Axis Bank and Bank of Baroda. Additionally, Ola Electric plans to enhance its EV portfolio, expand its gigafactory, and boost sales.  

Specifically, around ₹1,264 crore will be invested in increasing the gigafactory’s capacity, ₹800 crore will go towards debt repayment, and ₹350 crore will support organic growth initiatives. The company also anticipates needing ₹1,600 crore for research and development over the next three years. 

Ola Electric’s total borrowings have significantly increased from ₹39 crore in FY21 to ₹1,617 crore in FY24, reflecting its rapid growth and expansion efforts. In the competitive landscape, Ola Electric faces rivals such as TVS Motors, Bajaj Auto, and other startups like Ather Energy.