Expect the Ola-Uber ride-hailing cab companies’ rivalry to go one notch higher as Ola is set to raise another massive round of funding to the tune of $1 billion from Temasek, the Singapore-based sovereign wealth fund. There are possibly other investors as well.
These investments will be partly through secondary sale of shares plus other direct routes. In Ola’s 8-year existence, this is the first such liquidity-raising instance and the company’s valuation may be pegged around $6-7 billion. Ola has not officially confirmed any of these details.
On the identity of existing investors divesting their shares in this deal with Temasek, the reports suggest it could be Rehan Yar Khan, who has invested in his personal capacity and the original owners of Taxiforsure, who were allotted Ola sure at the time of its takeover. Accel India, Bessemer Venture Partners, Helion Venture Partners and the Taxiforsure founders Aprameya Radhakrishna and Raghunandan G are said to be these entities holding stakes in Ola and their total holding could be in the region of 5% and may be valued at around $150 million.
With these secondary share acquisitions and the primary infusion of funds against allocation of stakes, the new investors could end up holding a reasonable volume and proportion of shares in Ola.
The overall valuation of the company also goes up from the last exercise when the figure of $4 billion was quoted and the Chinese investment firm Tencent Holdings had pumped in $400 million.
With the fresh infusion of funds, the rivalry between Ola and Uber is bound to get hotter in the coming days.
Uber’s top management, led by CEO Dara Khosrowshahi has clearly stated that they are in India for the long haul and see value in the market and will continue to operate in India.
Globally too, Uber is trying to cut is losses in the Asian region by selling its South-East Asia business to SoftBank owned Grab, while at the same time Ola has moved overseas and is challenging Uber in Australia, offering a much better deal to the drivers there (7.5% commission as opposed 20% charged by Uber).
These companies are witnessing growth in segments other than cabs in markets, particularly in India. These include the auto rides offered by Ola and pooled rides by both; these have grown rapidly over the past few quarters for both Ola and Uber.