SoftBank's proposal to inject $1.1 billion into Ola has been rejected by the ride-hailing service's co-founder Bhavish Aggarwal, according to a Bloomberg report.
The publication quoted sources saying that SoftBank's initial proposal for funding would have raised its stake in Ola to 40 percent. Aggarwal has been seeking to retain control of the company after SoftBank had acquired a large stake in Uber, and sought for the rivals to merge.
Talks on the deal first began in 2017, where SoftBank proposed an immediate investment of $250 million, followed by the remaining $1.1 of the billion, which would be injected into the company over six months, the people said.
The report quoted sources saying that Aggarwal had called for a clause granting veto rights to founders over the appointment of any new CEO, a clause which SoftBank was unwilling to agree.
This led the talks to stall. SoftBank held talks to invest in Uber in parallel, and becoming its largest stakeholder in January 2018 after investing $9 billion. SoftBank then sought for the two companies to merge, ringing alarm bells for Aggarwal over SoftBank's influence on Ola. Uber and Ola are fighting neck and neck to grab a larger market share of the highly competitive ride-hailing space.
This stalemate led to SoftBank attempting to acquire Tiger Global's stake in Ola. The report quoted sources saying that Ola then changed its corporate bylaws to ensure that any sale that was carried out by investors would need approval of the board, which blocked SoftBank’s alternative.
The publication also noted in the report that Aggarwal is not present at events which host SoftBank-backed founders and Masayoshi Son, founder and current CEO of SoftBank . Aggarwal's absence was particularly felt at such an event which even included Saudi Crown Prince Mohammed Bin Salman. Saudi Arabia has funded close to half of SoftBank's $100 billion vision fund.
The report quoted an Ola spokesperson, who denied of any tensions with SoftBank.
"Softbank has been a great partner for us as we’ve grown our business," said the spokesman in a statement. "There are so many emerging synergies with SoftBank that we envisage in the years to come, as we continue to build a global mobility business out of India."
The report also quoted a SoftBank spokesperson saying that it has a cordial relationship with all its portfolio companies, including Ola, and does not comment on specific individuals and internal matters.
To ensure Ola meets its funding requirement, the company has been raising smaller amounts from other sources such as Tencent. The Bangalore-based company has also raised $300 million from Hyundai Motor, and close to $90 million in investments from Sachin Bansal, the co-founder of Flipkart.
The report stated that the merger talks between Ola and Uber are off as it prepares for an IPO, which is expected to fetch $120 billion. SoftBank would be focusing its energies on Uber as it is would be the key reflection on the success of SoftBank's vision fund.