Bengaluru: Ola, India’s largest cab-hailing service, has raised $50 million at a valuation of roughly $4.3 billion from Hong Kong-based Sailing Capital and the China-Eurasian Economic Cooperation Fund (CEECF), as part of the SoftBank-backed start-up’s move to raise fresh funds of at least $1 billion.
Sailing and CEECF, a state-backed investment fund of China, will hold a combined stake of more than 1% in Ola, implying that the latter’s valuation has inched up since its previous fund-raise, showed regulatory documents filed by Ola with the ministry of corporate affairs and sourced by business intelligence platform Paper.vc.
The latest fund-raise from the two Chinese investment firms comes at a time when Ola is aggressively expanding outside and within India, while also building up a strong food-tech business to compete with Swiggy and Zomato, as the Bengaluru-based company looks to fortify its lead against arch-rival Uber Technologies in India.
Last October, Ola, which is run by ANI Technologies Pvt Ltd, raised $1.1 billion in fresh funds at a valuation of $3.5-4 billion from China’s Tencent Holdings Ltd and existing investor, Japan’s SoftBank Group Corp. At the time, Ola indicated that it was in talks to raise another $1 billion from new investors.
Ola is expected to raise fresh funds over the coming months from new investors, including Singapore’s Temasek. Temasek has already bought secondary shares in Ola, according to two people aware of the latest discussions. Mint first reported in July that Temasek purchased shares worth at least $30 million from former and early employees of Ola as part of a secondary share sale.
To keep up its aggressive pace of expansion, Ola will need to consistently raise fresh funds from new and existing investors, at a time when India’s start-up ecosystem is witnessing a massive upsurge in funding momentum. Ola has raised roughly $2.5 billion since starting out in 2011 and is India’s second-most valuable internet start-up after e-commerce payment system and digital wallet company Paytm, whose parent company is One97 Communications Ltd.
More importantly, Ola needs to have massive amounts of capital at its disposal to fight Uber, which is easily the most deep-pocketed start-up in the world and also counts SoftBank as an investor.
In April, Mint had reported that Ola may raise funds separately for Foodpanda later this year to tap the strong investor demand for food-tech start-ups.
Apart from its push to raise fresh funds at a higher valuation, Ola co-founder and chief executive officer Bhavish Aggarwal has also been embroiled in a boardroom tussle with its largest investor, SoftBank.
Mint reported in May that SoftBank was in the midst of a boardroom battle with Aggarwal, after he had blocked a proposed deal involving Tiger Global Management selling part of its stake to SoftBank.
Last year, Ola had changed its articles of association to include a clause to prevent SoftBank from buying more shares in Ola without approval from the company’s founders and board.
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