SoftBank set to take driver’s seat in Ola

Japanese firm to pay $400-500 million to buy 10-12% stake from Tiger Global, taking its holding in ride-hailing firm to around 50%

Japanese investment giant SoftBank is close to acquiring an additional 10-12 per cent stake in ANI Technologies, the parent company of Ola, to increase its holding in the ride-hailing firm to around 50 per cent ahead of its planned investment in global rival Uber.

SoftBank will pay between $400 million and $500 million to Tiger Global, the second-largest backer of Ola, to give the US firm a partial exit, people familiar with the development told Business Standard on condition of anonymity.

Currently, Tiger Global holds a 21-22 per cent stake in Ola, while SoftBank, which has invested over $500 million in the Indian ride-hailing company, has around 38 per cent in it.

Lee Fixel, partner at Tiger Global, who had led the firm’s investment in Ola and held a board seat, resigned from the Bengaluru-based firm on November 8, according to documents filed with the Registrar of Companies, paving the way for SoftBank to increase its clout on the company’s board.

Ola, Tiger Global, and SoftBank declined to comment on the latest development.

SoftBank will pay Tiger Global a slight premium for its stake in Ola, despite the Japanese investor being the one to force Ola to raise capital at a valuation of $3.8 billion in its last round, down from a peak of $5 billion. The move is indicative of a discord that has been growing between Ola co-founder and CEO Bhavish Aggarwal and SoftBank, an insider said.

Ola announced in October it had raised $1.1 billion in funding led by Chinese internet giant Tencent. Business Standard reported that while Tencent invested $400 million in the firm, the rest was raised from SoftBank ($250 million), Ratan Tata’s UC-RNT Fund, and Falcon Edge Capital ($100 million). US-based hedge fund Tekne Capital has also invested $86 million as part of the round. Brent Irvin, vice president and general counsel at Tencent, joined the Ola board after the funding.

In May, Ola had amended its articles of association, stating that a secondary sale of shares between investors would require the approval of the company’s founders.

The move came against the backdrop of Tiger Global ousting the founders of Flipkart from holding any operational role in their company and installing its own man, Kalyan Krishnamurthy, as the CEO. While SoftBank agreed to the change, the Japanese investor supposedly became more vocal about the performance goals it wanted to see Ola achieve. The ride-hailing firm was to raise $2 billion as part of its most recent funding round, but SoftBank said it would invest the other $1 billion only if Ola was able to reach certain performance targets it had set.

Tiger Global, which held the title of the most prolific investors in Indian start-ups until the arrival of SoftBank, is looking at exiting some of its biggest bets in India. Earlier this year, Tiger brokered a deal to gain a part exit from ecommerce giant Flipkart, with SoftBank ploughing in $2.4 billion to help the company take on Amazon.

Eyeing SoftBank’s desire to own an ever larger part of Ola, Tiger Global is once again turning to the Japanese investor to help it make an exit, albeit partial, from a portfolio company in India.