The proposed $300 million (Indian equivalent of Rs 2,100 crore) investment in ride-hailing firm Ola by South Korean carmakers Hyundai Motor Company and Kia Motors has run into a Competition Commission of India (CCI) roadblock, sources close to the transaction said.
When the application for approval of the investment was made in March, the anti-trust watchdog asked ANI Technologies (the parent company of Ola) to define the competitive landscape, but apparently there was little progress on this. As a result, the application became ‘invalid’.
Earlier this month, the Bengaluru-based company refiled its application but with one notable change — while the entire $300 million investment was proposed in ANI Technologies, this time $250 million is meant for the parent company and $50 million for Ola Electric (in which Ola founder-CEO Bhavish Aggarwal is the biggest shareholder).
An investment approval that was first sought in March is still stuck, with no certainty that it will be cleared.
While absence of paperwork is the ostensible reason for the application running into trouble, sources said CCI is concerned about the competitive impact of car companies investing in ride-hailing apps. “It might create a monopolistic situation for one carmaker in the cab-hailing market,” a source said.
With the government giving electric mobility a big push, Ola is trying to placate CCI by saying that one-sixth of the proposed investment will be in Ola Electric. But in that entity Aggarwal personally owns about 40 percent stake, with investors Softbank, Tiger Global and Matrix Partners as the other key shareholders. A source said the second application also may not receive CCI’s green signal.
Hyundai launched its Kona electric car in July and is also working on a small electric car. An investment would likely see Ola utilise Hyundai’s electric cars for ride-hailing, and the carmaker could have employed Ola’s charging infrastructure.
Ola, Hyundai and Kia did not immediately reply to queries from Moneycontrol. CCI, too, did not comment.
In its latest application, Ola has provided a clearer picture of the competitive landscape, including: the market for manufacture and sale of passenger cars in India; the market for operational leasing services; the market for radio taxi services; and the market for charging infrastructure services for electric vehicles.
Ola, founded in 2010, has raised $3.3 billion to date, and is valued at $5.7 billion (This excludes the Hyundai-Kia investment proposal). Key investors in the company include Softbank, Tiger Global, Tencent, Matrix Partners and DST Global.