Ola investor again snips valuation of Indian cab-hailing firm

 Ola investor again snips valuation of Indian cab-hailing firm

An investor in India’s Ola has snipped its valuation of the company further after slashing it by nearly half at the onset of the COVID-19 pandemic that disrupted the ride-hailing business a year ago.

Ola, operated by ANI Technologies Pvt. Ltd, was one of the worst-hit technology startups in India as many companies switched to a work-from-home routine and physical distancing norms curbed demand for travel.

The company’s revenue plunged around 95% after India imposed a lockdown in late March 2020, co-founder and CEO Bhavish Aggarwal had said at the time. This even forced the company to cut costs and lay off staff.

This had likely prompted a fund managed by US-based investment firm Vanguard Group to slash Ola’s valuation by 45% in dollar terms between December 31, 2019 and June 30, 2020. Ola was valued a little over $6 billion in 2019. This came down to around $3.3 billion as Vanguard marked down the value of its holding.

The fund has now knocked down the value of its investment by another 9.5% in dollar terms. This means Vanguard reckons the cab-hailing startup is now worth around $3 billion, according to estimates by The Capital Quest.

A spokesperson for Vanguard said the company doesn’t comment on individual securities as per its policy. Ola didn’t respond to an email seeking comment till the time of filing this article.

Ola had issued shares to investors in its Series J financing round in 2019 at Rs 21,250 apiece. Vanguard has valued the shares at Rs 10,800 per share as of December 31, 2020.

The Bengaluru-based company raised over $500 million from late 2018 to December 2019 from Steadview Capital, Hyundai, Flipkart co-founder Sachin Bansal and Kia Motors, among several other investors.

What is interesting is that Vanguard has not revised its estimates of the value of its shares despite the lockdown being lifted several months ago.

India had begun opening up its economy after two months of hard lockdown. Most restrictions on businesses have been lifted, barring a few advisories to prevent the virus from spreading.

Ola’s global peer, Uber Technologies Inc, had also seen its share price halve last March. But New York-listed Uber has more than recovered. Indeed, its share price has nearly tripled from the lows of March 2020. The company is currently valued above $100 billion.

Since Ola is privately held, its latest valuation can only be ascertained if the company records a transaction among its shareholders or if the company issues fresh shares. Investors, however, make their own estimates based on different valuation models based on cash flows and other operating metrics.

Ola has spread its wings in other ancillary businesses such as financial services and electric vehicles. Those businesses have separately raised funding.

Pallavi S

The Capital Quest