Temasek, Fort Canning, Warburg seek CCI nod to buy Ola stake; Aggarwal wants more rights

Singapore-headquartered investment companies Temasek and Fort Canning and American private equity firm Warburg Pincus have separately filed a proposal with the Competition Commission of India (CCI) to invest in ANI Technologies, the parent of ride-hailing firm Ola.

Ola’s co-founder and CEO Bhavish Aggarwal is a part of both the proposals and seeks to increase his rights in the company, reveal filings.

The filings did not disclose the deal size or ownership sought. 

Temasek, Fort Canning and Aggarwal have collectively filed a proposal. Temasek has proposed to make the investment through its indirect wholly-owned subsidiary MacRitchie Investments. “The investment represents a good opportunity for MacRitchie and Fort Canning to invest and participate in the long-term growth of the cab aggregator market in India,” the filing said. 

The second proposal is filed by Warburg Pincus and Aggarwal. The private equity firm has proposed to acquire a minority shareholding in Ola through its Mauritius-based entity Plum Wood. 

According to the filings, Aggarwal intends to gain additional rights and strengthen his involvement in the management and affairs of ANI. 

“The Proposed Combination will provide ANI with the necessary financial resources to remain a significant and competitive player in the cab aggregation sector. The Proposed Combination will also allow the Ola Founder to influence ANI’s affairs to a greater extent and ensure that ANI’s operational / strategic decision making is in line with its vision,” it said. 

The parties, in their filings, claimed the proposed transaction will not lead to any change in the competitive landscape or cause any appreciable adverse effect on competition in India. 

Ola has been among the worst-hit technology startups following the outbreak of the coronavirus pandemic in India, as work-from-restrictions and physical distancing norms curbed travel demand. The company’s revenue plunged by almost 95% after the first lockdown in late March, 2020, Aggarwal said in May when the company laid off a third of its employees. 

VCCircle had reported that a fund managed by Vanguard Group, a US-based investment firm, slashed Ola’s valuation by a little more than half as of June 2020 compared with previous December.  

The Vanguard fund held 19,170 shares of ANI Technologies as of June last year at a value of $3.11 million. This comes to around $162.49 per share. However, its December 31, 2019, annual report showed that it held the same number of shares at a total value of $5.7 million. This comes to around $297.70 per unit. 

Going by historical exchange rates, the rupee value of the shares in December comes to Rs 21,224 apiece, nearly the same as the Rs 21,250 price at which Ola allotted its stock to investors in its Series J round last year. This means the company’s valuation fell by 54.6% on a per-share basis, according to VCCircle calculations. 

The Bengaluru-based company raised $562.2 million near the end of 2018 and in 2019 from investors including Steadview Capital, Hyundai, Sachin Bansal and Kia Motors. Several other high-profile investors and a few asset management funds also took part in this round, according to VCCEdge, the data research platform from Mosaic Digital. 

Ola was valued a tad more than $6 billion last year. This means its valuation after Vanguard’s markdown would have come down to around $3 billion.