Ola Electric Mobility IPO to launch on August 2 to raise Rs 5,500 crore

Ola Electric Mobility IPO: Ola Electric Mobility, the electric two-wheeler company, will initiate its initial public offering (IPO) on August 2, with plans to raise Rs 5,500 crore. A substantial portion of the funds will be allocated to expanding the capacity of its cell manufacturing plant and improving research and development (R&D).

The IPO will close on August 6, with bidding for anchor investors opening for a day on August 1, as per the red herring prospectus (RHP).

The IPO will encompass a fresh issue of equity shares worth up to Rs 5,500 crore and an offer for sale (OFS) of 8.49 crore equity shares by promoters and investors, according to the prospectus. Under the OFS, founder Bhavish Aggarwal will offload nearly 3.8 crore shares.

The price band for the public issue will be announced on Monday.

For Ola Electric, the IPO is a crucial step towards boosting its cell manufacturing capacity and advancing R&D on future technologies and products.

As detailed in the prospectus, Ola Electric Mobility Ltd (OEML) intends to use Rs 1,227.6 crore from the IPO proceeds to expand the capacity of its cell manufacturing plant from 5 GWh to 6.4 GWh. Additionally, Rs 1,600 crore will be allocated to research and product development, Rs 800 crore for debt repayment, and Rs 350 crore for organic growth initiatives.

The RHP states that Phase 1 (a) and Phase 1 (b) of the Ola Gigafactory setup and expansion in Krishnagiri district, Tamil Nadu, will be funded through internal accruals and long-term borrowings by its subsidiary Ola Cell Technologies Pvt Ltd (OCT). Phase 1 (a) is expected to be completed by March 2024, with a capacity of 1.4 GWh, while Phase 1 (b) aims to increase capacity to 5 GWh by October 2024, both funded internally and through long-term borrowings by OCT.

Phase 2 of the expansion plans to scale up capacity to 6.4 GWh by April 2025 and further to 20 GWh by the second quarter of 2026.

The company will use part of the IPO proceeds for capital expenditure by OCT to expand the cell manufacturing plant's capacity from 5 GWh to 6.4 GWh.

OEML announced a line-up of electric motorcycles on August 15, 2023, including models such as Cruiser, Adventure, Roadster, and Diamondhead, with deliveries expected to begin in the first half of fiscal 2026.

Regarding future product launches, the company plans to introduce affordable mass-market Ola S1 models, including electric two-wheelers (E2Ws) for personal, business-to-business, and last-mile delivery segments by the first half of fiscal 2025. Deliveries of the announced motorcycles are also slated for the first half of fiscal 2026. Ola Electric aims to expand its product portfolio to include mass-market motorcycles, catering to a broader consumer base with various product types and price points in the long run.

Last month, Ola Electric received approval from market regulator SEBI to proceed with its initial share sale.

(With PTI inputs)