Ola is always a step behind Uber, investment might be one of the key factor but that soon is going to change. As per the ET report, SoftBank is all set to back India’s prime ride-hailing service Ola with ₹2,000cr.
According to sources close to the deal, ANI Technologies Pvt’s Ola may raise USD 250-300 million in a new round of funding led by the Japanese telecom and Internet major, and other existing investors may also participate. They added that the announcement is expected to be made in the next few weeks.
Ola and Uber have been locked in a fierce tussle for market share in the country and are said to be losing hundreds of millions every year as they try to ramp up operations to achieve economies of scale. Ola is said to have lost around $119 million in 2015, while its U.S.-based rival is said to be losing $30 million per month currently. According to a source quoted by The Economic Times, Ola has apparently been looking to raise about $500 million in funding to achieve scale and focus on “quality of the business”.
While Softbank is believed to be interested in pouring in more money into the company, the promoters are apparently unwilling to part with any more of their holding to raise further capital. According to reports in the Indian media, Ola has already raised around $1.2 billion (~₹8,600 crore) until now from investors – including SoftBank Group, Tiger Global, Matrix Partners, Steadview Capital, Sequoia India, Accel Partners US and Falcon Edge – and was said to be valued at about $5 billion after the last round of funding last November, when the company received a cash infusion of about $500 million from Chinese tech company Didi Chuxing and Scottish investment firm Baillie Gifford.
In an effort to clean up its balance sheet, Ola has recently reduced driver incentives and raised fares in most markets around the country; a move that is believed to have paid rich dividends as the company is said to have been able to reduce its losses, which stood at around $40 million per month during the first half of this year.
With over 4.5 lakh vehicles registered on its platform, Ola offers services across more than 100 cities in India. Ola has been aggressively on-boarding driver partners on its platform and has also expanded to new categories like luxury car rentals and subscription services to attract premium customers. It had launched its leasing business to strengthen supply of drivers.
Ola’s fund-raising comes at a time when Uber is stepping up its investment in the country. Uber has said it will aggressively ramp up its operations in India after it exited China in July.
Source: The Economic Times