Ola ties up $2 bn funding from SoftBank, Tencent, others

Ola, the largest ride-hailing company in India, today secured $2 billion in new funding from a group of investors including SoftBank Group Corp and China's Tencent Holdings Ltd, Bloomberg reported, citing a person familiar with the matter.

The funding round isn't over yet and the amount could change, the person said.

Ola was widely reported to be in talks with SoftBank and Tencent for the funds at a time when global rival Uber is recovering from a series of PR calamities and a management shakeup that saw founder Travis Kalanick ousted from the role of chief executive officer (See: Uber cofounder and CEO Travis Kalanick resigns).

The Economic Times cited its sources to say Chinese internet conglomerate Tencent has finalised a $400-million investment in Ola, valuing the Bengaluru-based startup at over $3.8 billion. The paperwork for the transaction has been finalised and the deal is awaiting approval from CCI.

''The investment has been completed and the understanding is that a sizeable portion will be allotted towards boosting the electric vehicle segment,'' said an ET source.

The funding is also backed by a venture capital fund jointly run by industrialist Ratan Tata, the University of California's investment arm and US institutional investors, Bloomberg said, citing people familiar with the deal.

SoftBank subsidiary SIMI Pacific Pte picked up 12,97,945 shares valued at Rs10 at a premium of Rs12,895 in ANI Technologies which runs Ola, filings with the Registrar of Companies showed.

The allotment of shares was done in November last year, it added. The latest funding, however, is believed to have come at a lower valuation.

None of the parties to the deal were prepared to comment officially.

The investment in Ola comes at a time when Softbank is working on selling Snapdeal, an e-commerce platform it invested heavily in India, to larger rival Flipkart.

Ola was aggressively looking at raising funds to compete with Uber, the world's most valuable start-up. After selling its Chinese business to Didi Chuxing last year, Uber has now set sights on India.

Japan's SoftBank has been looking to play consolidator in the country's flourishing startup ecosystem with investments that include about $1 billion in e-commerce company Snapdeal and $70 million in grocery delivery group Grofers.

Tata is already an investor in Ola in his personal capacity.

The UC-RNT Fund, a partnership between former Tata Sons chief Ratan Tata and the University of California's investment arm, could plough $50 million into Ola, reports said.

Earlier this year, Ola amended its Articles of Association (AoA) to require SoftBank to seek approval of Ola's founders Bhavish Aggarwal and Ankit Bhati, besides the board, to increase its stake through either primary or secondary share purchases.

Ola has managed to raise about $150 million in funding this year, from funds like Ratan Tata's venture fund RNT Capital Advisors, US hedge fund Falcon Edge and New York-based hedge fund Tekne Capital Management.

In November 2016, it closed a $250 million raise from SoftBank, after which it has kept the funding round open.