Apart from providing a part exit to marquee investors such as Singapore’s GIC and Tiger Global, the initial public offering (IPO) of the electric two-wheeler Ather Energy will also see several venture debt funds receive a collective payout of Rs 378 crore.
Venture debt funds provide loans to startups and earl-stage companies, which use these funds for funding acquisitions, capital expenditure or a bridge to the next round of equity infusion among others. Venture debt helps founders raise extra capital without diluting equity.
Ather plans to raise Rs 3,100 crore in fresh capital from the IPO, of which Rs 378.2 crore will go towards repayment of loans taken from Alteria Capital (Fund I and II), Innoven Capital India Fund, Stride Venture Debt (Fund II and III) and Nuvama Crossover Yield Opportunities Fund, the draft red herring prospectus shows. The company filed the documents with the market regulator on September 9.
As of July 31, these funds had loans worth Rs 439.4 crore, with Innoven Capital having the highest outstanding amount of Rs 177.2 crore followed by Stride at Rs 150 crore, Alteria at Rs 62.2 crore and Nuvama at Rs 50 crore.
To get their money back, venture debt funds largely depend on liquidity events such as a new round of VC investment or an IPO.
These loans were availed by Ather for funding its capital expenditure needs, working capital and other general corporate purposes. The loans are for a tenure ranging from 20 months to 30 months and carry an interest rate ranging from 14.5 percent to 14.85 percent.
As of July 31, Ather’s borrowings stood at Rs 671 crore.
In FY24, Ather's revenue from operations stood at Rs 1,754 crore, down 1.5 percent from 2023, but a 329 percent increase from 2022. On the other hand, loss before tax rose by 24.7 percent in 2024 to Rs 1,060 crore, up from Rs 865 crore in 2023 and Rs 344 crore in 2022.
Apart from the repayment of loans to the four venture funds, Ather will use Rs 927.2 crore for setting up a factory in Maharashtra, Rs 750 crore for research and development and Rs 300 crore for marketing initiatives, the DRHP said.
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