India: Temasek said to be in talks to invest in SoftBank-backed Ola

March 6, 2018

After speculations of Japanese investment giant SoftBank wanting to pump in more funds in Indian ride hailing major Ola, Singapore’s sovereign wealth fund Temasek is now reportedly in talks to invest in the Uber rival.

According to a report in The Economic Times quoting sources, Temasek and other investors are looking to invest $500 million-$1 billion in Ola. If the deal goes through, it would value Ola at $6-7 billion, the report added. The transaction is likely to include a secondary sale of shares by a number of investors.

It was reported late last year, that SoftBank was planning to increase its stake by 10-12 per cent in the eight-year old company to take its total ownership to around 50 per cent in ANI Technologies, the parent company of Ola.

Interestingly, Temasek and SoftBank and also investors in Uber’s Southeast Asia rival Grab, and the Japanese giant also picked up 15 per cent stake in global giant and Ola’s biggest rival Uber recently.

In October, 2017 Ola announced raising $1.1 billion in a funding round led by Chinese internet major Tencent Holdings Ltd and existing investor SoftBank. The Bengaluru-based company further said it was also in advanced talks with other investors to close an additional $1 billion as part of the current financing round, taking the total amount raised in the round to $2 billion.

Earlier reports had suggested that Microsoft Corp was also looking to invest $50-100 million for a small stake in Ola.

According to the latest report, early shareholders including angel investor Rehan Yar Khan and the investors who got stocks in Ola after its acquisition of Taxiforsure in 2015, are seeking an exit through this deal.

These investors include venture firms Accel India, Bessemer Venture Partners, Helion Venture Partners and Taxiforsure founders Aprameya Radhakrishna and Raghunandan G. The secondary block is pegged at $150 million for a stake of more than 5 per cent, said the sources cited in the report.

Uber has been increasing pressure on market leader Ola through various driver incentives and promotions to capture a greater share of India’s $10-billion ride-hailing market.

Founded in 2011 by IIT Bombay alumni Bhavish Aggarwal and Ankit Bhati, Ola currently has a presence in 110 cities in India. It recently also launched its services overseas starting with Australia.

Apart from cab-hailing services, it offers India-centric categories like auto-rickshaws and bikes as well as vehicles equipped with the world’s only connected car platform for ridesharing, Ola Play.

Last year, in a bid to diversify its offerings, Ola acquired the Indian operations of food delivery platform Foodpanda from Germany-based Delivery Hero Group. It also committed to invest $200 million in the food delivery operations.