Ola Electric, the e-scooter manufacturer supported by SoftBank Group, submitted its initial draft papers to the Securities and Exchange Board of India (SEBI) to initiate an initial public offering (IPO) aimed at raising ₹5,500 crore, on Friday, December 22.
This marks the inaugural IPO from an Indian electric vehicle (EV) manufacturer and is notably the first IPO by a two-wheeler maker in India since the introduction of Bajaj Auto in 2008. With backing from Japan’s SoftBank and Singapore’s investment firm Temasek, the Bengaluru-based EV manufacturer achieved a valuation of $5.4 billion in a recent funding round.
The matter pertains to a new equity share issuance amounting to ₹5,500 crore and a simultaneous offer for sale (OFS) of 95,191,195 equity shares with a nominal value of ₹10 each. As per the preliminary documents dated December 22, Bhavish Aggarwal, the founder of Ola Electric, intends to divest up to 47.4 million shares. It’s worth noting that Aggarwal had previously made a ₹45 lakh investment in the Pune-based electric vehicle startup, Tork Motorcycles.
The company is yet to disclose the opening and closing dates for subscription for the IPO. Although the official announcement is pending, various media reports suggest that the public offering is expected to commence in early 2024. Additionally, details regarding the offer price and IPO price band remain undisclosed at this time.
Here are top 10 key risks involved in the upcoming public offer —
- The company has a limited operating history and has incurred losses and negative cash flows from operations.
- Ola Electric could experience defects, quality issues or disruptions in the supply or increase in prices of components used in its electric vehicles thus increasing material costs and the price of its electric vehicles and impacting projected manufacturing and delivery timelines.
- If the electric vehicles contain defects, do not perform as per industry standards and/or fail to meet the performance levels advertised, our brand and reputation and the ability to develop, market and sell its electric vehicles could be adversely impacted, and it may be compelled to undertake product recalls or similar corrective actions and have legal actions taken against the company.
- The company may face various risks that could hinder its in-house cell manufacturing capabilities at the Ola Gigafactory.
- It may not be able to compete successfully in the highly competitive and fast evolving automotive market.
- The company’s business depends substantially on the continued efforts of its key managerial personnel, Senior Management and other qualified personnel, and our operations may be disrupted if it loses their services.
- If the company is not able to attract and retain customers, the business, prospects, financial condition, results of operations, and cash flows would be materially harmed.
- Inadequate access to public charger guns for consumers could materially and adversely affect demand for the electric vehicles.