It is, however, unclear whether Ola's co-founder Bhavish Aggarwal will accept more capital from SoftBank
Japan's SoftBank has offered to invest over $1 billion in a new funding round for Ola, The Economic Times reported. The cab aggregator may use the fund to boost its food delivery business and invest in areas such as e-pharmacy, sources told the paper. Ola is reportedly close to finalising an investment in the pharmacy sector.
It is, however, unclear whether Ola's cofounder Bhavish Aggarwal will accept additional capital from SoftBank and allow the investor to raise its shareholding from about 26 percent at present, the report said.
"The possibility of giving SoftBank another 10-15 percent stake would be the reason why Aggarwal may not accept the offer in its current form," a source told the paper.
Thus, even though SoftBank's CEO Masayoshi Son and Aggarwal have met multiple times recently, Ola reportedly wants to avoid taking such a big amount from SoftBank. Earlier, Aggarwal had refused a $1 billion offer from SoftBank in 2016 to not cede control to the Japanese group.
"It may eventually be a smaller infusion if at all SoftBank puts in fresh cash. They (Ola) may also look to get a new investor on board," a source told the paper.
Moneycontrol could not independently verify the story.
Ola may bring in other investors for the new round of funding, sources told the paper.
Until now, Ola has assured about $200-250 million funding from Flipkart co-founder Sachin Bansal and existing backer Steadview Capital.
Singapore's sovereign wealth fund Temasek may also infuse capital in the taxi aggregator. In August, Temasek Holdings had acquired some stake in India's cab-hailing company for about $225 million.
The investment from Bansal and Temasek will help Aggarwal ensure diversity in the company's shareholder base as both entities have pledged their voting rights to the co-founders.
After the new round of funding, Bansal and Temasek will together hold 7-8 percent in Ola, while the co-founders would have a combined 10-11 percent stake. In such a scenario, Aggarwal would have control of about 25 percent of voting rights in the company as Yuri Milner's DST Global, which owns about 6 percent stake, had also given its voting rights to Ola founders in 2015.
The voting right would allow Aggarwal to block special resolutions proposed by shareholders, which includes corporate actions such as M&As.
Ola's new round of funding comes as the slowing growth pace in the ride-hailing industry has pushed the company to expand into new areas. Ola and Uber reported a 20 percent decline in growth on an average in 2018 to 3.5 million rides across all segments, including taxis, autorickshaws and shared cabs, the report said.
As a result, Ola is planning to expand in pharma retail as it is a high-frequency category with healthy margin even after discounting.In December last year, Ola had bought the Indian arm of Foodpanda from its German parent: Delivery Hero. It had also committed to pump in $200 million food delivery service Foodpanda, which is the largest such funds infusion in an Indian online food ordering and delivery company till date. The cab-hailing service provider is also said to be in talks to buy food delivery brand Freshmenu.