Vanguard marks down Ola again, pegs fair value at $3.5 bn

Vanguard has slashed the fair value of Ola for the second time in three months.

US-based Asset Management Company (AMC) Vanguard has cut the fair value of ANI Technologies, the parent company of ride-hailing platform Ola, for the second time in three months, effectively valuing it at less than half of its previous valuation.

Vanguard, which holds 166,185 shares of Ola or about 0.7 percent stake in the company, has pegged the fair value of its stake at $25,038,000 down from its acquisition cost of $51,748,000, the AMC's regulatory filings showed. This implies a valuation of $3.5 billion for Ola against its last private market valuation of $7.3 billion.

In February, Vanguard had marked down the fair value of its stake in Ola by 35 percent, effectively valuing it at $4.8 billion.

This is the fourth valuation markdown of Ola by the same investor. Vanguard Group cut the value of its investment in the ride-hailing firm by 45 percent in the first half of 2020 and another 9.5 percent in 2021.

The second consecutive markdown of Ola by Vanguard highlights the stress in valuations at India's startup ecosystem, which is currently the world's third-largest. Investors have cut back on deals, especially late-stage significantly over the previous 12 months.

Till July 2023, startups in growth and late stages secured $3.7 billion in funding across 146 deals against a seven-month aggregate of $12.4 billion raised across 272 deals in the seven-month period in 2022. India has also not seen a new unicorn (a startup valued at over $1 billion) for 11 months.

Industry observers have also started raising questions about the depth of India's internet market. Startup founders like Zerodha's Nithin Kamath, PhonePe's Sameer Nigam, and Cuemath's Manan Khurma, along with veteran investors like SoftBank's Rajeev Misra, have recently suggested that founders oversold India's market, especially in 2021 while raising funds.

Earlier this week, Fidelity Investments, one of the world's largest AMCs halved the fair value of conversational  messaging unicorn Gupshup to about $700 million.

Other unicorns including Eruditus, Byju's, Swiggy, Pine Labs, and Pharmeasy have seen their fair values get marked down by US-based AMCs including Baron Capital and Private Shares Fund, alongside Fidelity.

It is important to note that these adjustments to fair values are typically based on AMC's internal assessment of the macro and microenvironment. They do not necessarily indicate a permanent markdown in the startup's overall valuation.