India’s Ola in funding talks with Naspers at a valuation of $7-8b

Ola founder Bhavish Aggarwal. Photo: Bloomberg

South African internet conglomerate Naspers LLC is in talks to invest in ANI Technologies Pvt. Ltd, which owns ride hailing company Ola, at a valuation of $7-8 billion, said three people familiar with the development.

Besides Naspers, Ola is also in talks with Singapore’s Temasek Holdings Pvt. Ltd and two other funds to raise $1 billion in fresh capital, the people cited above said, requesting anonymity.

Ola, which is currently valued at about $4 billion, may see its valuation double after the proposed funding round, they said, adding the talks haven’t reached the final stages. Last October, Ola had raised $1.1 billion from SoftBank Group Corp. and Tencent Holdings Ltd, among others. It had announced back then that it would raise $1 billion more.

However, the company’s proposed funding has faced hurdles over concerns related to a boardroom battle between Ola chief executive Bhavish Aggarwal and SoftBank and Tiger Global, the people cited above said. Aggarwal had blocked a proposed sale of shares by Tiger Global to SoftBank late last year in order to stop the Japanese investor from raising its stake.

Potential investors are wary of backing a company that has had differences with SoftBank, the most powerful investor in the tech world, the people added. Temasek’s discussions with Ola was reported by Mint and other publications. The Singaporean investor is already in the process of becoming a shareholder in Ola through a secondary deal worth over $200 million. Once that deal is completed, Temasek will invest primary capital in Ola at a much higher valuation, the people mentioned above said. “Temasek has decided to complete the secondary share purchase first, before finalizing the terms of the primary investment. Usually both primary and secondary transactions happen simultaneously, but in this case, they want to negotiate the primary transaction at a higher valuation only after existing shareholders have sold their stakes in the secondary deal,” said one of the people cited above.

Ola and Naspers did not respond to a request for comment.

The latest funding talks come at a time when Ola is attempting to shore up its core cab-hailing business in India against arch-rival Uber Technologies Inc. As part of its plans, it is looking to aggressively expand its footprint abroad and within India, besides building a strong food-tech business to compete with the likes of Swiggy (Bundl Technologies Pvt. Ltd) and Zomato (Zomato Media Pvt. Ltd).

Over the past one year, Ola has attempted to build separate businesses to boost its valuation. The company is expanding its food business Foodpanda to win market share. Its is also trying to expand its electric vehicles unit and payments business, besides eyeing international markets including Australia and New Zealand.

Earlier in September, Ola had raised $50 million at a valuation of $4.3 billion from Hong Kong-based Sailing Capital and the China-Eurasian Economic Cooperation Fund, as part of the $1 billion round. Since starting out in 2011, Ola has raised over $2.5 billion.

For Ola, it is imperative to keep a large war chest ready to fight Uber. The company also needs to attract new investors if it wants to avoid raising more capital from SoftBank.

This article was first published on livemint.com