Ola is a name that demands no introduction. India‘s first cab aggregator startup has made getting a cab a breeze. Ola, officially known as OlaCabs and owned by ANI Technologies Pvt. Ltd., was founded in December 2010 by two IIT Bombay alumni. Ola is a service that connects taxi drivers and riders.
The company collaborates with several taxi drivers and owners and lends a touch of advanced technology to the overall arrangement rather than owning and letting out its cars. This allows users to book taxis on the go using Ola’s app. Ola is India’s ride-hailing service, with a customer base of just under 50% (according to Uber’s 2020 projection). It has over 250 cities in India as customers and employs over 2.5 million driver-partners.
It is dedicated to its purpose of creating connectivity for a billion people, which is powered by a hyperlocal strategy. It has recently entered the vehicle and bike booking business, staying true to its objective. In 2017, Ola launched an ‘Ola Pedal’ bicycle-sharing service to help with last-mile communication.
Ola to acquire fintech Avail Finance
According to an announcement released on Thursday, SoftBank-backed ANI Technologies Pvt Ltd, which runs a taxi ride-hailing aggregator, has committed to purchase a new banking platform, Avail Finance, which offers financial services to the blue-collar workers. It did not disclose the purchase price and stated that it is still to shareholder approval. Money control, however, indicated that the deal is a $50 million share swap.
Ola is already a shareholder in fintech Avail Finance, which was launched in 2017 by Bhavish Aggarwal’s brother Ankush Aggarwal and Tushar Mehndiratta. Ola’s parent company, ANI Technologies Pvt Ltd, was founded by Bhavish Aggarwal. Falcon Edge and Matrix Partners are among the financial services firm’s investors, in addition to Ola. According to Mint, Avail Finance recently bought YeLo, a neo bank in the same market, and is also seeking regulatory approval to purchase non-bank lender Art Climate Finance (India) Pvt. Ltd.
According to the article, the company is breaking a crucial Reserve Bank of India (RBI) rule that only banks and non-banking financing firms (NBFCs) are allowed to lend. Micro NBFCs are exempt from numerous auditing and reporting rules that larger corporations are obligated to follow. Avail Financial Services Ltd states that Avail Finance has over 6 million subscribers. Ola Financial Services, which aims to develop a mobility-focused financial services firm, said the purchase would strengthen its drive into the fintech industry. With this purchase, the Financial Services will boost its position in the ‘credit underserved categories,’ which includes blue-collar employees like Ola’s driver-partner ecosystem.
It will make use of Avail Finance’s products and expertise, enabling the company to grow into neo banking offerings while also promising its loan business. Their fintech company will be bolstered by Avail Finance’s leadership team, which has extensive exposure in the consumer loan market, as well as a powerful technical team with expertise in technology, product and design, data science and analytics and other areas. It will be capable of crossing several financing products to its vast driver-partner base as a result of this growth, giving them a one-stop shop for all of its financial requirements.
Ola also stated that it has recently acquired almost Rs. 800 crore in its financial industry, which it claimed was growing at a rapid pace across its loan and insurance verticals. Their Postpaid has 40 million clients who may use its BNPL (buy-now-pay-later) service. Ola Electric Mobility Pvt Ltd, which also makes electric scooters, said its vehicle finance business is developing quickly in tandem with Ola Electric and their cars, its used-car company. It claims to have created a first-of-its-kind embedded vehicle coverage journey for Ola Electric and Ola Cars, in which clients may choose insurance and add-ons like roadside assistance or 0% depreciation during the purchasing process.
Axis Growth Avenues AIF and Arrow Multi-Asset Fund recently invested a total of 150 crores in the firm as a portion of its Series J round, valuing it at nearly $7 billion. However, given global instability, the business, which had planned to go public in 2022, appears to have put back its IPO (Initial Public Offering) plans. The business was also reportedly taking into consideration private market financing at a lower valuation of $5 billion.
Ola’s inroads into neo banking and the development of its financial services company come at a time when several Indian digital entrepreneurs are aiming to expand their lending and credit offerings. Zomato, which is supported by Ant Group, has announced that it will establish a wholly-owned non-banking financial firm (NBFC). Zomato did not say why it did it, but the food aggregation and delivery platform is trying to offer BNPL services to its consumers through the NBFC.
VCCircle noted earlier this year that India’s new-age financial technology services businesses are progressively creating net banking platforms to offer credit and other banking products to clients in an attempt to increase market dominance. Many technology businesses, like Ola, are broadening their products to give customers a comprehensive one-stop-shop for everyday requirements. In January, Ola relaunched its rapid commerce businesses as Ola Dash and announced intentions to open 500 so-called dark shops, or warehouses without retail storefronts, all over 20 Indian cities within the next six months, citing increased competition for fast commerce in the country.
According to sources familiar with the transaction’s terms, the agreement came through at a time when Avail Finance was having financial issues and was having difficulty gaining financing. “After its $11.5 million Series B investment in August 2020, the firm was valued at roughly $70 million. “As a result, the acquisition for $50 million is a step down from its earlier valuation,” a source familiar with the situation said on anonymity.
Edited by Prakriti Arora