Published By : 05 Oct 2017 | Published By : QYRESEARCH
Tencent has finalized its investment of US$400 mn in Bengaluru-based Ola. The cab hailing startup was valued at US$3.8 bn by Tencent. Pending CCI’s approval, the deal has been signed and is likely to be announced in the coming days. A major part of the investment from Tencent, a Chinese internet conglomerate, is thought to be directed at the development of the electric vehicles sector.
Ola’s total funding for 2017 is more than US$150 million, in addition to the US$250 million raise it received in SoftBank in November 2016. The funding round has been kept open since then, with Ola entering the funding round with a lower valuation than when SoftBank valued the company at US$4.5-5 bn in 2015. The momentum witnessed by Ola in the recent funding round can be at least partially attributed to the lower valuation, and the funding round becomes the first down round by an Indian internet company with a valuation of more than US$1 bn in 2017.
Tencent Investment to Help Ola Push Back SoftBank
The investment from Tencent is also considered as a key step in Ola trying to limit the role played by SoftBank in its business operations. Earlier this year, Ola changed its operating rules to make it necessary for SoftBank to seek approval of the Ola board and Ola’s founders, Bhavish Aggarwal and Ankit Bhati, before increasing its share. The changes apply to primary as well as secondary share purchases. Funds such as Ratan Tata’s RNT Capital Advisors and U.S.-based hedge funds such as Falcon Edge and Tekne Capital Management are also likely to become increasingly important for Ola in the coming years.