Ola cabs’ parent company could come out with an IPO as soon as it becomes eligible to do so, as per a Livemint report.. Under Indian conditions, a company has to remain in profits for three consecutive years. ANI Technologies, the company that owns Ola, is expected to have made profits for the last financial year ended March 2019. The company is yet to make public its results. What is available on record is a projection made in early 2017 that Ola will turn in a profit of about Rs 1,170 crore in FY-18-19.
It has to be however acknowledged that ANI Technologies will have to do much beyond just posting profits on its books. For starters, the company will have to have its stock listed. It is understood that there are steps being taken for this. The other action taken is the setting up of a pre-IPO trust fund. This trust has been setup by ARK Impact Asset Management, a South Korean company and will be managed by it along with some of the small, medium and individual investors in Ola. ARK is an investor in Ola, one of the latest to commit itself to the Indian ride-share Unicorn that is valued at $7 billion.
There is a separate report that suggests some Indian startups are under pressure from some marquee investors in their companies to move towards an initial public offer (IPO). Once the shares are publicly traded, it becomes easier for the investors to liquidate their holding even in small quantities and keep rewarding their own shareholders.
Besides SoftBank, Hyundai, which has also made investments in Ola, is also keen that Ola go for an IPO. Experts explain that the pre-IPO trust formation is one of the strategies investors have come up in recent times. The idea is to make investments in the trust fund and it gives the investor the benefit of a pre-decided price before the IPO and the subsequent maiden listing.
Ola has to keep in its sight, the way the Uber IPO went in its home bourses in the US. That was not something great to write about. Uber was valued at $76 billion before the IPO and now its market cap has not crossed the $50 billion even.
There are other issues to content with for Ola if it wants to list with a premier bourse in India like the BSE or NSE. One of the key stipulations is that the promoters have to hold at least 20% equity in the company. The promoters, Bhavish Agarwal and Ankit Bhati don’t have that level of holding in the company. With difficulty they have recently lifted their holdings to 12%.