Bengaluru-based cab sharing platform Ola is in the process of raising $1.9 Mn (INR 14 Cr) via allotting preference shares to China-based electric vehicle company Eternal Yield International.
According to reports, the company decided in a meeting that around 9,684 preference shares will be given to the Chinese company at a price of $208 (INR 14,603) per share.
The process of preference share allotment allows an investor to own a stake at the issuing company at a certain price. However, there is a condition that whenever the issuing company decides to pay dividends, the holders of the preference shares will be the first to be paid.
This development comes at a time when reports have said that Ola cofounder Bhavish Aggarwal is looking to reduce the influence of SoftBank, its largest investor. The company has resisted efforts by Japanese conglomerate from increasing its current stake of 26% in Ola.
The company had also amended its Articles of Association to include a clause which prevents SoftBank from buying more shares in the company without approval from the founders and board.
To raise funds the company is currently in talks with Flipkart cofounder Sachin Bansal, existing investor Steadview Capital, African Internet conglomerate Naspers LLC and Singapore-based sovereign wealth fund Temasek.
It is looking to raise looking to raise $100 Mn (INR 701 Cr) investment from Steadview Capital at a valuation of $5.5-6.5 Bn (INR 38,571 Cr – 45,580 Cr).
The year of 2018 has been a year of expansion and growth for the company. The company has launched its operations in Australia, UK, and New Zealand. The company also reportedly set up teams in Dhaka, Bangladesh and Colombo, Sri Lanka.
As it looks to grow and strengthen its presence in the foreign markets, the company also made a leadership shuffle to ensure a smooth rollout of its future plans. In December, the company announced that Bhavish Aggarwal will be responsible for looking for the international operations as the group CEO while cofounder Ankit Bhati will drive its growth in the home country as the CEO.
In July 2018, the company had also announced that it has started making profits on every ride booked on its platform after considering other expenses such as driver incentives and customer discounts in the home ground.
The decision to raise small amounts of funding from new investors may be a part of the founders’ strategy to avoid any investor from gaining control of the company.