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Ola drives away with USD 1.1bn, seeks additional USD 1bn
Posted on Wednesday, 11 October 2017 13:37
Ola, India’s home-grown cab-hailing answer to Uber, has officially announced a USD 1.10 billion round of funding following days of speculation by the media regarding which companies invested and the value.
Interestingly, not only did Tencent lead this financing, which included participation from existing backer SoftBank and unnamed new US-based financial parties, but that the popular ridesharing application is already in talks for a further USD 1.00 billion.
Ola, or Ani Technologies as it is officially known, added it is in advanced discussions “with other investors to close an additional USD 1.00 billion as part of the current financing round, concluding a total raise of over USD 2.00 billion”.
A source told TechCrunch that, should the platform raise the total amount, then it would have a valuation of USD 7.00 billion, not bad going for a six-year-old company going head-to-head with Uber domestically.
Ola kept pretty quiet about how it plans to use the money raised, merely saying it would invest in supply and technology in order to build on it existing presence in 110 cities as well as its India-centric fleet of auto-rickshaws and bikes.
A person familiar with the matter told the Financial Times (FT) the new cash would help expand operations for buying cars and leasing them to drivers and be spent on electric vehicles.
However, the newspaper noted the equity infusion would also go some way towards easing the burden that an aggressive growth strategy has had on the taxi aggregator’s bottom line.
It is believed that Ola is burning through money: revenue for the 12 months to March 2016 was seven times higher year-on-year at INR 7.60 billion (USD 116.04 million) but pre-tax losses widened from INR 8.00 billion to INR 23.00 billion.
Regardless, its financing round has helped make 2017 a record year for private equity, venture capital or development capital (PE, VC and DC) investment in Indian companies, according to Zephyr, the M&A database published by Bureau van Dijk.
Zephyr shows the value of PE, VC and DC deals in the country’s technology sector is already worth more than USD 8.00 billion so far this calendar year, following a significant dip in 2016 (2016: USD 3.81 billion; 2015: USD 7.61 billion).
© Zephus Ltd