The private equity firm is reportedly planning to invest between $100-150 million in Ola Electric as part of a larger funding round expected to reach $300-350 million.
Sources familiar with the matter have revealed that the funding round is in its final stages of due diligence and is anticipated to raise the electric vehicle maker valuation to $6 billion. This valuation represents a 20 percent increase from the $5 billion valuation the company achieved in its previous funding round of $200 million in January of this year.
Ola Electric’s IPO Plans
The current funding round may mark the final equity investment for Ola Electric as a private company, as the electric vehicle maker has already initiated discussions with bankers in preparation for a potential initial public offering (IPO) next year.
Speculation is already swirling that the company may file its draft IPO papers as early as next quarter, further fueling excitement in the market.
In a separate development, Ola Electric’s founder, Bhavish Aggarwal, has engaged in discussions with Catamaran Ventures, the investment firm established by NR Narayana Murthy, co-founder of Infosys. Catamaran Ventures is reportedly interested in investing in something similar to Temasek’s commitment, further solidifying Ola Electric’s position as an attractive investment opportunity.
Ola Electric’s Gigafactory Expansion
Adding to the company’s growth trajectory, Ola Electric recently broke ground on its gigafactory in Tamil Nadu. Spanning an impressive 115 acres of land, the gigafactory might commence operations in early 2024, with an initial capacity of 5 gigawatt-hours (GWh).
The company plans to expand its capacity to 100 GWh in phases, marking a significant step towards meeting the rising demand for electric vehicles.
While the electric vehicle maker forges ahead with its expansion plans, the Indian government’s decision to reduce subsidies on electric two-wheelers is expected to have a short-term impact on sales.
The market is readjusting to higher prices under the new subsidy regime. Nevertheless, Ola Electric has maintained its position as a market leader, with a 27% market share in electric two-wheeler registrations in May 2023.
Ola Electric will launch a lower-priced variant of its S1 scooter in July to mitigate the impact of reduced subsidies.
The company, like its competitors, has had to adjust its pricing strategy following the subsidy cuts. Additionally, Ola Electric has strategically decided to discontinue the smaller 2kWh variant of the S1 Air scooter.
With Temasek leading the upcoming funding round, Ola Electric is positioned for significant growth, reflected in its impressive valuation increase.
The company’s plans for an IPO next year and ongoing discussions with prominent investors showcase its ambition and market potential.