Ride hailing service Ola (ANI Technologies Pvt. Ltd) is likely to raise another $100 million from investors, four months after the company raised about $250 million from its largest shareholder, Japan’s SoftBank Group Corp, according to regulatory filings sourced from market research firm Tofler.
According to the documents, Ola’s board of directors approved a capital infusion of $100 million in March this year, four months after Ola raised $250 million from SoftBank in November, as part of a bigger funding round that lowered the company’s valuation to about $3 billion from $4.5 billion.
“The board of directors of the company at their meeting held on 16 March 2017 proposed the infusion of additional funds up to $100 million, which is approximately Rs670,00,07,046 by issuing 4,95,526 Series 1 preference shares of face value of Rs10, at a price per subscription share equivalent to Rs13,521 to its existing holders of equity shares on rights basis,” the company said in a regulatory filing.
Incidentally, Ola issued Softbank shares at Rs12,895 per share in November, regulatory filings show, which implies that the company’s valuation has surged marginally by about 5% in the latest funding round.
The company’s authorized share capital has been increased from Rs5,587.10 crore to Rs5,587.66 crore, according to the documents.
Ola, which has been trying to raise fresh capital since last June, is in talks with new investors to get at least $300-400 million more. If Ola gets new investors, SoftBank will invest more in the company, Mint reported on 14 April.
For the SoftBank round in November, the valuation of Ola, which has so far raised nearly $1.5 billion in cash, dropped to about $3 billion on a pre-money basis.
Pre-money refers to the valuation excluding the current round’s cash infusion.
Ola’s post-money valuation will be determined by the exact amount of capital it finally attracts, Mint reported on 14 April.
Ola has been struggling to raise capital partly because it is locked in a bruising battle with Uber, the world’s most valuable and deep-pocketed start-up, for India’s cab hailing market. After selling its Chinese business to Didi Chuxing last August, succeeding in India became one of the top priorities for Uber.
Many investors are fearful of backing an Uber rival, the people cited above said. Investors also expressed doubts about the viability of the cab hailing business, they said. For the year ended March 2015, losses at Ola jumped by more than 20 times to Rs754.87 crore even as revenue rose from Rs51.05 crore to Rs418.25 crore, documents show.
Ola and Uber together clocked a nearly fourfold increase in the number of rides booked through their platforms in 2016 from a year earlier, according to a report by market research and advisory firm RedSeer Management Consulting Pvt. Ltd. Ola and Uber Technologies Inc, together completed about 500 million rides in 2016, as against about 130 million rides the year before, according to the study
Ola didn’t respond to emails seeking comment.
India’s largest Internet firm Flipkart raised a mammoth $1.4 billion from Tencent, eBay and Microsoft in a down round. Flipkart’s valuation fell to $11.6 billion from $15 billion on a post-money basis.
Ola, which was India’s third-most valuable Internet start-up, is likely to retain its position despite the down round. Online marketplace Snapdeal, which was once valued at $6.5 billion, is up for sale at a fraction of its peak valuation. Snapdeal’s place as India’s second-most valuable Internet firm has been taken over by digital payments firm Paytm.