Ride-hailing major Ola has not raised any primary funds ever since the $1.1 billion funding from Softbank and Tencent in October 2017. While the Bengaluru-based company has been in talks to raise a fresh primary financing round from Temasek and existing investors, the deal is yet to materialize.
Meanwhile, Ola is raising a new round from a Chinese investor on the valuation of $5 billion. “It’s raising about $70 million in primary capital from a well known Chinese investment group. The deal has been finalised and is likely to be announced early next month,” reveal two sources.
Sources requested anonymity as they aren’t authorised to speak to media. Entrackr couldn’t ascertain the name of the investor.
Although the funding amount is small, valuation of Ola has crossed $5 billion for the very first time. During the recent secondary transaction worth $225 million from Temasek, the company valuation remained undisclosed.
However, a Mint report outlined that a previous secondary transaction by the Singapore government-owned investment firm executed in July worth $30 million had valued the company in the range of $2.5-3 billion.
At its peak valuation about (about $4.5 billion), Ola had scooped up $500 million led by Baillie Gifford and China’s largest taxi-hailing platform Didi Kuaidi in November 2015. The $5 billion valuation comes at a time when data-research firm Paper.vc recently suggested that instead of growth in valuation, Ola’s valuation has slipped drastically from its peak.
“The deal has been in negotiation stage for past 8-10 weeks. However, the consensus on valuation and other terms were agreed upon a couple of weeks ago,” add sources.
Currently, Ola has been doing about 2 million rides on a daily basis. Importantly, it also claims to be getting closer to the goal of achieving profitability. Lowering commission and incentives for drivers as well as reducing discounts for riders are factors driving Ola closer towards the road of profitability.
According to research consultancy Redseer’s report, the take-home pay for drivers dropped 33 per cent in the last one year.
Ola’s operating loss has increased 32 per cent to Rs 3,731 crore in FY17 while operating revenue more than doubled to Rs 1,178 crore. Besides, its other expenses (not explained) also rose up to Rs 4,052 crore from Rs 2,422 crore.