Ola's chess match with both rivals and investors; seeks $1 bn funding
Cab service company Ola is looking at raising a new round of funding, of at least $1 billion (Rs 64 billion), from Singapore-based Temasek Holdings to diversify its investor base. And, its US-based rival, Uber Technologies, is deciding to sell its business in Southeast Asia to local rival Grab Inc. With these, the focus has again shifted to the outlook for the ride hailing business in this country, in case the US-based company also sells the business and merges it with Ola, in exchange for equity. Both have a common investor, Japan-based SoftBank. The latter recently took a 20 per cent stake in Uber and, according to estimates, also has more than 20 per cent in Ola, the largest stakeholder there. Ola promoters Bhavish Aggarwal and Ankit Bhati have already put in place a plan to deal with the eventuality of a merger or buyout, to ensure they are in management control. For one, they are clearly diversifying their investor base. This is to ensure no one investor, such as SoftBank, is able to dictate terms. Ola declined to comment. Those in the know say the strategy is based on the tense boardroom battle at e-marketplace Snapdeal, were SoftBank put pressure on the promoters to sell the business to Flipkart, which they resisted. The Japanese investor then wrote off its investment in Snapdeal. That explains Ola’s latest round of funding of $1 billion, for which they are looking at a new partner in the Singapore-government supported Temasek Holdings. In October last year, it raised $1.1 billion, led by SoftBank’s rival Chinese investor, Tencent. Some estimate the Chinese investor has around nine per cent stake. And, experts say, SoftBank’s stake has fallen due to the new funds raised, which it could make up by buying from existing investors which want a partial exit.
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