Fresh Rs.1,675 crore investment in Ola from Softbank

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A fresh funding round for ANI Technologies – the company that runs Ola Cabs – saw the Japanese investor SoftBank pump in close to Rs.1,675 crores in fresh funds. The funding is reportedly to help the Bangalore-based transportation company take on their only real competition in the space – Uber.

The investment was in the form of 12,975,945 shares being purchased by SIMI Pacific Pte, a subsidiary company of SoftBank – valued at Rs.10 at a premium of Rs.12,895.

Uber, with its international presence and resultant massive cache of funds, was able to undercut Ola’s pricing model and offer rides at incredibly affordable rates, sometimes even lower than public transport. Ola was not able to compete with the Uber’s aggressive pricing model and lost a sizeable market share.

Coupled with cab drivers’ strikes and reports of drivers molesting female passengers, both companies have been striving to install safety features in addition to providing affordable transportation services. Uber was able to absorb its costs and write off its losses with the profits from its international presence, but Ola has been handicapped for the last few months in that respect. This new infusion of funds could see aggressive competition in the space – which could result in customers feeling the benefit of more affordable cabs.

Uber has zeroed in on the Indian market to expand its business, even foregoing the huge potential in China by selling off its presence in China to Didi in 2016. Since then, Ola and Uber have been at loggerheads to win the loyalty of the Indian commuter.

SoftBank is also reportedly in talks to sell off SnapDeal, which it invested in to rival India’s heavy-hitter in the e-commerce space – Flipkart. The move shows a level of faith by a large investor in an Indian startup at a time when investor trust is fading due to the high burn rate and low results by Indian startups using venture capitalist money.

 

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