Ola Electric IPO: Mixed Investor Response Marks Inaugural Day

Ola Electric Mobility's Rs 6,145 crore IPO saw a lukewarm reception, being subscribed only 35% on the first day. Retail investors showed more interest, while institutional bidders remained cautious. Funds raised will enhance cell manufacturing and R&D. Hyundai Motor Company may own $99 million worth of shares if the issue succeeds.

The Rs 6,145 crore initial share sale of Ola Electric Mobility received a muted response from investors, with the issue being subscribed only 35 per cent on the first day of the bidding process on Friday.

Retail investors were the most active participants, with the portion reserved for them being subscribed 1.57 times. The issue, open for subscription from August 2 to August 6, received bids for 16.31 crore shares against 46.51 crore shares on offer, according to the National Stock Exchange (NSE) data available till 5 pm.

Non-institutional investors subscribed to 20 per cent of their share, while qualified institutional bidders (QIBs) showed minimal interest. Hyundai Motor Company's potential stake in Ola Electric could amount to shares worth $99 million if the public issue succeeds. This interest translates to 108.8 million equity shares, or a 2.95 per cent stake, valued at the highest price band of Rs 76 per share.

The pricing for Ola Electric Mobility shares is set between Rs 72-76 per share, with a minimum bid requirement of 195 equity shares per lot. The IPO comprises a fresh issue of equity shares up to Rs 5,500 crore and an offer for sale (OFS) of 8.49 crore equity shares worth Rs 645.56 crore—totaling the issue size to Rs 6,145.56 crore. Founder Bhavish Aggarwal will sell nearly 3.8 crore shares as part of the OFS.

The IPO proceeds will support diversified investments including Rs 1,227.6 crore for expanding cell manufacturing capacity from 5 GWh to 6.4 GWh, Rs 1,600 crore for R&D and product development, Rs 800 crore to repay debts, and Rs 350 crore for organic growth initiatives. Phase 1 of the Ola Gigafactory in Krishnagiri district, Tamil Nadu, will see funding from internal accruals and long-term borrowings by its arm Ola Cell Technologies Pvt Ltd.

A portion of the proceeds will cover expansion costs for the cell manufacturing plant's capacity enhancement. The company also managed to mobilize Rs 2,763 crore from anchor investors like SBI Mutual Fund, HDFC Mutual Fund, Nippon India Mutual Fund, Bharti Axa Life Insurance Company, Kotak Mahindra Life Insurance Company, Nomura India Investment Fund, Goldman Sachs, and Fidelity.