Ola Electric is said to face investor pushback on IPO valuation

At $5 billion, Ola Electric’s current investors may opt not to sell existing shares in the company, the people said. Considerations are ongoing and no final decisions have been made, the people said.

Ola Electric Mobility Ltd., India’s largest electric scooter maker, is facing investor pushback on its targeted valuation for its upcoming initial public offering, according to people familiar with the matter.

The company’s founder has been aiming for a potential valuation of as much as $7 billion in a Mumbai listing, the people said, asking not to be identified as the information isn’t public. That would compare with a valuation of about $5 billion based on initial feedback from investors, the people said.

At $5 billion, Ola Electric’s current investors may opt not to sell existing shares in the company, the people said. Considerations are ongoing and no final decisions have been made, the people said.

A representative for Bengaluru-based Ola Electric didn’t immediately respond to a request for comment.

Backed by SoftBank Group Corp. and Tiger Global Management, Ola Electric is looking to raise 55 billion rupees ($659 million) by selling new shares in the IPO, according to its prospectus. India’s market regulator approved the company’s IPO plans on Thursday.

The scooter maker’s IPO comes as India continues to be a bright spot for equity capital markets in Asia. Bankers expect more to come as potential uncertainty regarding the country’s elections has now passed and expectations for economic growth remain strong.

Read more: India Bankers Predict IPO Surge as Election Uncertainty Lifts

The IPO is part of the company’s ambitious plans to expand into battery-powered cars and EV cells. Founder Bhavish Aggarwal is building what he’s touting as the world’s largest electric vehicle hub in southern India for producing battery-powered two-wheelers, cars and lithium-ion cells. The startup has also launched electric motorcycles.

Ola Electric is planning to use part of the proceeds to help expand the manufacturing capacity of its electric vehicle cell factory to 6.4 gigawatt hours from 5 gigawatt hours.

Kotak Mahindra Capital Co., Citigroup Inc., Bank of America Corp. and Goldman Sachs Group Inc. are among banks working on the share sale, according to the prospectus.