Exclusive: Ather Energy IPO to hit Dalal Street in first week of April

After weeks of pause, India Inc seems to be gearing up to raise capital through initial public offers (IPOs) route amid hopes that recovery in secondary market will foster investor confidence. The last main board IPO to hit Dalal Street was Quality Power Electrical Equipments, which got listed on the domestic bourses on February 24, after raising ₹858.70 crore.

The highly-awaited IPO of Ather Energy is expected to open for subscription in the first week of April, source close to the development told Fortune India. The electric two-wheeler manufacturer last week filed its revised draft red herring prospectus (DRHP) with the capital market regulator SEBI.

Ather Energy filed its preliminary documents with the Securities and Exchange Board of India (SEBI) in September 2024, for which it received approval in December 2024. With the financial statement disclosed in the DRHP, the company needs to launch its IPO before May 12, 2025, as earnings figures cannot be older than 135 days. If Ather misses May 12 deadline, it will have to include March quarter earnings in the offer document.

Ather seeks $1.6-1.8 bn valuation

The IPO of electric scooter startup, backed by investors includingHero MotoCorp, Sachin Bansal, Binny Bansal, Tiger Global, and the National Investment and Infrastructure Fund (NIIF), could fetch an enterprise value in the range of $1.6-1.8 billion, as per industry sources.  

In August last year, Ather Energy raised ₹600 crore in a funding round led by National Investment and Infrastructure Fund (NIIF), valuing the company at$1.3 billion.

According to market analysts, investors are willing to pay a premium due to its leadership position in the electric two-wheeler market, business expansion plan, and strong outlook for the sector. They also said that Ola Electric's valuation post IPO listing had set new benchmarks for E2W companies’ valuations. While Ola is trading at around 6x its current enterprise value to sales ratio (EV/sales), Elon Musk’s Tesla is currently trading at 6.8 times EV/sales.

To raise fund via fresh issue, OFS

The IPO of the Bengaluru-headquartered pure play EV firm is a combination of a fresh issue of equity shares worth up to ₹3,100 crore and an offer for sale (OFS) of up to 2.2 crore equity shares by the selling shareholders, according to the draft red herring prospectus (DRHP).

The selling shareholders include co-founders Tarun Mehta and Swapnil Jain, each offering up to 1,000,000 equity shares. Among the corporate selling shareholders, Caladium Investment Pte Ltd will sell up to 10,520,000 equity shares, National Investment and Infrastructure Fund II up to 4,616,519 equity shares, Internet Fund III Pte. Ltd. up to 4,000,000 equity shares, 3State Ventures Pte. Ltd. up to 480,000 equity shares, IITM Incubation Cell up to 310,495 equity shares, and IITMS Rural Technology and Business Incubator up to 41,910 equity shares. Additionally, individual selling shareholders Amit Bhatia and Karandeep Singh will offer up to 18,531 equity shares and 13,311 equity shares, respectively.

As per the DRHP, the company proposes to utilise the net proceeds of the fresh issue towards funding of capital expenditure requirements for establishment of an electric two-wheeler factory in Maharashtra for ₹927.2 crore; investment in research and development worth ₹750 crore; repayment or pre-payment, in full or part, of certain borrowings availed by the company (₹378.2 crore); expenditure towards marketing initiatives (₹300 crore); and general corporate purposes.

Established in 2013, Ather Energy designs and develops electric two-wheelers, battery packs, charging infrastructure, associated software and accessories as well as manufactures battery packs and assembles E2Ws in-house. In fiscal year 2024, Ather Energy sold 109,577 E2Ws and was the third largest player by volume of E2W sales, as per CRISIL.

The company’s current E2W portfolio comprises two product lines – the Ather 450 line, which caters to customers seeking performance scooters, and the Ather Rizta line, which is targeted at customers seeking convenience scooters for their family.

Axis Capital, HSBC Securities and Capital Markets (India) Pvt Ltd, JM Financial and Nomura Financial Advisory Securities (India) Pvt Ltd are the book-running lead managers to the issue. The equity shares are proposed to be listed on BSE and NSE.

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