$1.1 Billion in Boot, Ola on the Road to Raise Another $1 Billion by Year-end

Bengaluru: India’s largest ridehailing application, Ola, is in advanced discussions with investors to raise an additional $1 billion after securing $1.1 billion in financing led by Chinese Inter- net conglomerate Tencent.

The additional fund-raising is part of the current financing round that values Ola at about $4 billion, the company said in a statement. Ola wants to close the entire $2-billion financing round by the end of the year, according to people aware of the company’s plans.

Existing investor SoftBank and “other new US-based financial investors” participated in the financing led by Tencent, Ola said without disclosing the names of the new investors.

ET was the first to report, in July, that Tencent was in advanced talks to invest in Ola.

While Ola’s massive fund-raising will give it firepower to stay ahead of Uber in India, the company will also strongly focus on its electrical vehicles project, according to people familiar with developments in the company.

Both Ola and Uber are also wor- king on integrating their apps with public transportation services.

“Partnerships are being discussed with bus services and the companies already have partnerships with airport authorities and the Indian Railways,” said an analyst on condition of anonymity. “One common goal the two have is public transport integration.”

Ola executives said the company was bullish on its electric vehicle project scaling up in six months. “That hasn’t happened yet due to a few technical and infrastructural issues that need to be addressed,” said an executive.

“But that’s an area where one can expect to see Ola making its presence felt within a six-month span,” said the executive.

Ola’s electric vehicle project has the blessings of SoftBank chief executive Masayoshi Son. Although the Japanese Internet conglomerate is the largest shareholder in Ola, it is in the process of picking up a large stake in San Francisco-headquartered Uber as well.

Uber executives in India said the cab-hailing platform, in addition to expanding to new cities, was also focused on its fooddelivery service, UberEATS, and motorcycle-taxi service, UberMOTO, picking up steam. “New products or features to improve customer experience may be tested out in the Indian market soon,” one of them said, declining to be identified.

Ola executives said the company will use its new capital also to add drivers through an increased focus on its cab leasing business. The company also plans deeper investments in technology, primarily in data sciences and its electric vehicle infrastructure, they said.

“The transportation and mobility industries are seeing huge changes globally. Our ambition is to build a globally competitive and futuristic transportation system in India,” Ola CEO Bhavish Aggarwal said after announcing the fund-raising led by Tencent.

Ola first received commitments for the current financing in November last year when it closed a $250-million fund-raise from SoftBank, following which it kept the funding round open. The company then raised about $150 million this year from funds including Ratan Tata’s venture fund RNT Capital Advisors, US hedge fund Falcon Edge and New York-based hedge fund Tekne Capital Management. The funding momentum comes after Ola decided to raise capital from SoftBank at a lower valuation of $3 billion — down from its estimated worth of $4.5-5 billion in 2015. It was the first so-called down round — a term used to define fund-raising at a lower valuation — for an Indian Internet company valued at over $1 billion.