By Kashish Tandon and Nandan Mandayam
BENGALURU (Reuters) – Ola Electric’s IPO drew $1.8 billion in bids as the share sale closed on Tuesday, as investors piled into the first stock offering by a pure-play electric vehicle maker in India.
The SoftBank-backed company’s $734 million IPO, also India’s biggest so far this year, received bids for 1.99 billion shares, about 4.3 times the number of shares on offer, exchange data showed.
The IPO has let investors bet on a clean energy push by Prime Minister Narendra Modi’s government, and is set to give the company a valuation of about $4 billion, a term sheet showed last week.
The targeted valuation is about 25% lower than Ola Electric’s last funding round in 2023, due to a correction in valuation of global tech companies as well as the company’s aim to attract participants to the stock offering.
The portion of the IPO allocated for institutional investors including foreign investors, banks and mutual funds was oversubscribed 5.3 times, while retail investors bid for 3.9 times the shares on offer for them, exchange data showed.
Ola Electric is the biggest player in a country where adoption of clean vehicles is low, but rising. The company had 46% of the e-scooter market as of June 30 despite slashing sales goals last year.
Still, some analysts have expressed concerns over rising costs and the path to profitability at Ola Electric.
The loss-making company is still in its investment phase, and needs a lot of capital, particularly in its battery cell manufacturing unit, which would take time to ramp up, said Narendra Solanki of Anand Rathi Shares and Stock Brokers.
In the year to March 2024, Ola Electric’s losses widened 8%, despite a 90% jump in revenue, due to rising raw material costs.
Ola Electric, founded in 2017, plans to invest about $150 million of its IPO proceeds into the cell manufacturing unit, which the company pegs its profitability on, according to the company’s prospectus.
The IPO subscription is lower compared to the last five IPOs, including drugmaker Emcure Pharma, which were oversubscribed between 20 and 80 times.
The company did not respond to Reuters’ request for comment.
A recent sell-off in global equities also dampened overall sentiment in an otherwise booming domestic stock market that has seen 150 companies raise nearly $5 billion this year. The local bourses shed 2.7% on Monday and 0.3% on Tuesday.
(Reporting by Kashish Tandon and Nandan Mandayam in Bengaluru; Editing by Chris Thomas and Tomasz Janowski)
