Ola raises $500 million debt in run-up to IPO

The IPO-bound Ola has raised $500 million in a term loan B facilitated by J.P. Morgan and Deutsche Bank, which acted as the joint lead arrangers for the debt financing. The loan will mature in 2026, a company spokesperson has said.

“The proposed loan issuance received a staggering response from investors with interest and commitment of approximately $1.5 billion,” the Indian multinational business company said in a press release.

Founded in 2010, Ola hopes to raise up to $1 billion through its IPO planned for 2022. The Bangalore-based company was valued at $6.5 billion in 2019 but its valuation fell post the pandemic to $3.3 billion. However, after suffering revenue losses during the Covid-19 lockdowns, the company went on a growth spree, introducing new verticals. Ola Cars, its second-hand auto retail platform was one such novel vertical. Other than its original cab-hailing business, it also runs vehicle-rental and food delivery businesses. The company created Ola Electric and became an OEM wheeling out electric scooters this month.

It reported EBITDA (earnings before interest, tax, depreciation and amortisation) of ₹89.92 crore in FY2021, though the company saw revenues fall by 65% in demand for ride sharing during the lockdowns.

Ola received funding from several venture capital funds in the past, including SoftBank which has a large minority stake in its parent firm ANI Technologies Pvt. Ltd.

The company’s business moves are in keeping with its vision which it calls ‘new mobility’ bringing ‘seamless digital buying, selling and ownership of vehicles to consumers’. The company says it is ‘dedicated to transitioning the world to sustainable mobility’.

In 2018 Ola expanded operations to Australia and New Zealand, then launching in the U.K. the following year with 25,000 newly-registered drivers.

Ola is not the first Indian startup to take on such a debt. Hotel room aggregator OYO Rooms raised $660 million debt from investors in a Term Loan B in July 2021 and was the first Indian startup to do so. Edtech firm Byju’s also raised funding to the tune of $1.2 billion via a term loan in November 2021.

Ola intends to utilise the loan to expand across its various business verticals including ride hailing, vehicle commerce, food delivery, quick commerce and financial services.

“The overwhelming response to our term loan B is a reflection of the strength of our business and our continued focus on improving unit economics alongside rapid growth. At Ola, we are accelerating our journey towards building the new mobility ecosystem to help a billion people move sustainably,” says Bhavish Aggarwal, the company’s founder and CEO.