Bengaluru-based Online Cab service provider company Ola becomes the $3.8 billion startup after getting another funding of $400-million from a Chinese internet conglomerate Tencent .
The paperwork for the transaction has been finalized and the deal is awaiting approval from CCI, according to the News source.
“The Investment has been completed and the understanding is that a sizeable portion will be allotted towards boosting the electric vehicle segment” – source.
“According to some news Tencent was in advanced talks to invest in Ola and executive from the Chinese company has discussed details of the investment with Ola’s management team.
Tencent’s investment is a part of an ongoing round of financing since November in which it has managed to mop up $800 million till now. Ola could raise additional capital as it has also held talks with US-based hedge funds Coatue Management.
Bloomberg reported on Monday night that Ola has raised $2 billion in the round from investors like Tencent and Soft-Bank, besides financial investors from US.
They of Tencent will help Ola counter the influence of its largest shareholder Soft-Bank.
Earlier this year, Ola also amended its Articles of Association ( AoA) to require Soft-Bank to seek approval of Ola’s founders Bhavish Aggrawal and Ankit Bhati, besides the board, to invrease 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 Novemeber 2016, it closed a $250-million raise from Soft-Bank, after which it has kept the funding round open.
The funding momentum comes after Ola decided to raise capital at a lower valuation of $3-billion – down from $4.5 – 5 billion in 2015 from SoftBank in November 2016. The fundraising was the first down round- a term used to define fundraising at a lower valuation- for an Indian internet company valued over $1 billion in the current cycle.
According to analysis, Ola continues to be the market leader and completes approximately 1.5 million rides a day, while its San Francisco- based rival Uber Claimed to complete 1.3 million rides a day in August 2017. Verticals like Ola’s auto rickshaw segment and outstation rides have begun to pay off. Uber, however, is not present in the auto segment in India but has been expanding its bike sharing service, UberMoto.
The increasing interest in Ola among Investors comes at a time when rival Uber has been embroiled in a series of internal challenges, which have already led to changes in its top management, with former Expedia CEO Dara khosrowshahi taking former Uber CEO Travis Kalanick’s place.
Uber also announced earlier this year that it was exiting direct operations in Russia, having sold its business there to local player Yandex for a stake in combined entity. Last year, Uber sold its business in China to Didi Chuxing. This has raised questions about whether Uber will continue to aggressively spend on global markets.