Local and international investors are eager to join the anchor book of Ola Electric Mobility’s IPO, which is expected to value the electric two-wheeler maker at around $4 billion. The IPO will open on August 2.
Domestic investors like SBI AMC, HDFC AMC, Nippon Life India AMC, and UTI AMC plan to bid about $200 million each. International investors such as Fidelity, Nomura, and Norway’s Norges Bank will bid between $75-100 million each.
First Auto IPO in 20 Years
This will be the first auto IPO in India in over two decades since Maruti Suzuki’s listing in 2003. The maximum investment allowed per investor is around $30 million. Ola’s IPO aims to raise $350 million (Rs 3,300 crore) from the anchor book, which is 45% of the total IPO size of Rs 6,200 crore. Of this, Rs 5,500 crore will come from new shares, and the rest from an offer for sale (OFS) of 85 million shares by existing investors. Ola CEO Bhavish Aggarwal is also selling 37.91 million shares, reducing his stake from 45% to 37%. The anchor book opens on August 1, with the IPO running from August 2-6 and listing on August 9.
Increased Investor Interest
Investors are attracted to Ola Electric’s IPO as it will be India’s first pure electric vehicle (EV) manufacturer to be listed. The company’s current valuation is nearly half of what was expected in December 2023 due to changing market conditions. This new valuation implies an EV/sales ratio of 6.7 times based on FY24, which is in line with Indian internal combustion engine (ICE) two-wheeler manufacturers.
“If you believe two-wheeler EV adoption will grow by 30-40% in the next five to six years, there’s plenty of room for long-term investors,” said a person familiar with the deal. Currently, EV penetration in the two-wheeler segment is around 5%, and 15% in the scooter segment.
Ola Electric’s vehicle registrations doubled to 329,386 units in FY24 from 152,547 the previous year, increasing its market share to 48.68% in the June quarter from 39.38% in the January-March period. FY24 revenue rose to Rs 5,243 crore from Rs 2,782 crore the previous year, with a net loss of Rs 1,584 crore compared to Rs 1,472 crore. The company’s gross debt increased to Rs 2,389 crore in FY24 from Rs 1,645 crore in FY23.
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