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Ola Electric, the Indian electric vehicle manufacturer, is preparing for its initial public offering (IPO), and the news has brought to light the diverse investment strategies of various stakeholders. While some investors are poised to cash in on their gains, others face potential losses due to the IPO's price band. The article highlights the decision of key investors, including Paytm founder Vijay Shekhar Sharma and Bollywood personalities Zoya and Farhan Akhtar, to retain their shares in Ola Electric despite the upcoming IPO.
According to a Moneycontrol analysis, Sharma and the Akhtar siblings are sitting on a significant 26% profit at the upper end of the IPO price band, which has been set at Rs 72-76 per share. Their acquisition price works out to Rs 60.36 per share, reflecting a bonus issue and conversion of preference shares prior to the IPO. This underscores the confidence these investors have in Ola Electric's future prospects.
While Sharma and the Akhtars are opting to hold onto their shares, the article also reveals a potential downside for some pre-IPO investors. The price band for the public issue is set lower than the average acquisition price for certain investors, presenting a unique situation for tech IPOs in recent years. For instance, early investors like Tiger Global and Matrix Partners are likely to enjoy substantial gains, while others such as Alpine Opportunity Fund VI LP and Tekne Private Ventures XV Ltd could see losses exceeding 30% at the upper price band. This variation highlights the inherent risk and reward dynamics associated with pre-IPO investments.
Ola Electric's IPO is expected to be one of the largest in India this year, with a total issue size of Rs 6145.96 crore. The IPO comprises a fresh issue of Rs 5,500 crore and an offer for sale (OFS) of up to 84.94 million shares. The company's market cap at the upper price band is estimated to be around $4 billion, a notable decrease from its $5.4 billion valuation in September. This lower valuation is attributed to the global tech correction and Ola's strategy to boost market participation. Despite this, Ola Electric boasts a strong position in the Indian electric two-wheeler (E2W) market, having captured a 35% market share at the end of fiscal 2024.
Ola Electric's IPO presents a compelling opportunity for investors seeking exposure to the burgeoning electric vehicle sector in India. The company's strong market position, coupled with its commitment to expanding its D2C omnichannel distribution network, positions it well for continued growth. However, investors must carefully consider the potential risks and rewards associated with pre-IPO investments, as highlighted by the varying experiences of different investors.
Source: Ola Electric IPO: Vijay Shekhar Sharma, Zoya and Farhan Akhtar are holding onto their 26% gains