Ola valuation declines after SoftBank funding

Cab hailing service Ola received R1,675 crore from its largest shareholder SoftBank Group Corp in November as part of a bigger funding round that will lower the company’s valuation to about $3 billion from $4.5 billion.

Ola (ANI Technologies Pvt Ltd) issued preference shares worth R1,675 crore to SoftBank in November 2016, documents with the Registrar of Companies show.

Ola, which has been trying to raise fresh capital since last June, is in talks with new investors to get at least $500 million more, two people familiar with the matter said on condition of anonymity. If Ola gets new investors, SoftBank will invest more in the company, the people said.

In this round, the valuation of Ola, which has so far raised nearly $1.5 billion in cash, will slide to about $3 billion on a premoney basis, the people said. Pre-money refers to the valuation excluding the current round’s cash infusion. Ola’s post-money valuation will be determined by the exact amount of capital it finally attracts.

Ola has been struggling to raise capital partly because it is locked in a bruising battle with Uber, the world’s most valuable and deep-pocketed start-up, for India’s cab hailing market. After selling its Chinese business to Didi Chuxing last August, succeeding in India became one of the top priorities for Uber. Many investors are fearful of backing an Uber rival, the people cited above said. Investors also expressed doubts about the viability of the cab hailing business, they said.

For the year ended March 2015, losses at Ola jumped by more than 20 times to R754.87 crore even as revenue rose from R51.05 crore to R418.25 crore, documents show.

Ola and SoftBank didn’t respond to emails seeking comment.