As SoftBank is close to investing in Uber, it wants to increase its holding in Ola.

Tiger Global may sell part of its stake in Ola to SoftBank for 400-500 millionImage source: PTI
Atom M&A Wednesday, November 22, 2017 - 11:39

Homegrown cab aggregator Ola’s largest investor SoftBank is likely to acquire an additional 10-12% stake in Ola’s parent ANI Technologies. SoftBank is reportedly planning to buy it from Ola’s second largest investor Tiger Global.

According to a report in Business Standard, SoftBank will pay Tiger Global around $400-500 million to give it a partial exit. The strategy behind this move for SoftBank is to increase its holding in Ola and it also comes at a time when it is looking at a massive investment in rival Uber.

Tiger Global holds around 12-15% stake, while SoftBank holds 25% in the Bengaluru-based ride hailing firm.

The reports of such a deal first came up in May when FactorDaily reported that SoftBank is in talks with Tiger Global to buy the latter’s stake in Ola for about $700 million.

What further fuels rumours of the deal is the resignation of Tiger Global Management partner Lee Fixel from the board of cab aggregator Ola, as reported by VCCircle, which further started in the news reports that the reason behind the resignation and whether there is a representative from Tiger Global on the board of Ola is not clear.

This isn’t the first time SoftBank has attempted at acquiring stake from existing investors. In the Uber deal as well, it is looking to buy shares from several existing investors.

In India too, SoftBank paid nearly $500 million to Flipkart’s existing investor Tiger Global, which held 28% stake in Flipkart, in exchange for one-third of its shares in Flipkart. This was part of the $2 billion funding by SoftBank Vision Fund as an extension to Flipkart’s $1.4 billion funding round led by Microsoft, Tencent and eBay.

With SoftBank set to pick up a major stake in Uber, its move to get a stronger hold over its Indian ride hailing bet Ola sets the stage for what could be an extremely interesting turn of events in India’s ride-hailing space.

And at a time when almost every large ecommerce or internet firm is backed by huge investors that act as the steering wheel of these companies, Ola made some significant changes to its shareholder terms in May 2017 to restrict the rights of its largest investor SoftBank Group Corp. and others, while strengthen the rights of its founders.

While it was the first time a startup was seen making such a move, the idea was to protect itself from a potential hostile takeover by any of its largest shareholders. And the move came around the time when SoftBank was aggressively orchestrating the sale of Snapdeal to Flipkart, a move that was not welcome by Snapdeal’s founders either. 

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