EV scooter maker unicorn startup Ola Electric allotted 364 million shares to anchor investors to mop up Rs.2,763 crore. The allotment was made at Rs.76 apiece — the top-end of its price band.

The IPO of Ola is set at Rs.6,146 crore, which is regarded as the biggest since the Rs.21,000 crore IPO of the state-owned LIC in May 2022. It will be open for subscribe from today and will continue till Tuesday. The anchor allotment was made to over 80 domestic as well as foreign funds.

Approximately Rs 1,117 crore was allocated to domestic mutual funds, including SBI MF, HDFC MF, Nippon MF, and UTI MF. Foreign funds that received allocations include Templeton Global, Nomura, Amundi, Jupiter Global, and Goldman Sachs.
The offer for sale (OFS) portion of the issue is worth Rs.646 crore, in which Bhavish Agarwal’s share is Rs.288 crore. Nearly nine investors are selling stakes, including Tiger Global (Rs. 48 crore) and Softbank (Rs. 181 crore). Alpine Opportunity and Tekne Private are offloading small quantities at a loss as their acquisition cost is over Rs. 111 per share.

Investment bankers noted that demand for the anchor book surpassed the number of shares available. The anchor allotment, which occurs a day before an IPO opens, offers guidance for other potential investors. Approximately 60% of the shares set aside for institutional investors in the IPO can be allocated through the anchor book.

Softbank-backed Ola has established a price range of Rs. 72-76 per share for its initial public offering (IPO). At the upper end of this range, the company's valuation would reach Rs.33,522 crore ($4 billion) on a post-diluted basis. The Bengaluru-based firm aims to raise Rs.5,500 crore through the IPO, which will be used to repay debt, expand its gigafactory, and fund research and development.

Post the launch of IPO the promoter shareholding in the company will decline from nearly 45% to 36.78%.

Ola has recorded a net loss in FY24 and was even loss-making at the operating profit level. The company has been burning cash but has managed to improve its free cash flows loss margin to -31% in FY24. Due to the cash burn, Ola has moved from net cash positive in FY22 to net debt in FY24.

If the future of the two-wheeler (2W) industry is electric, Ola is already ahead of the competition. With nearly 3.3 lakh deliveries in FY24, the company held a 35% market share. According to Redseer, the penetration of electric two-wheelers (e2W) in India is projected to increase from about 5.4% of domestic 2W registrations in FY24 to 41-56% of domestic 2W sales volume by FY28. The Indian e2W industry is expected to grow at a compound annual growth rate (CAGR) of 11%, expanding from $35 billion (Rs 2.8 trillion) to $45 billion (Rs 3.6 trillion) by FY28.