SoftBank pumps in Rs1,675 cr into Ola

Japanese investor SoftBank has pumped in about Rs1,675 crore ($250-260million) in fresh funding in Indian cab-hailing start-up Ola, giving it more ammo in its fight with American rival Uber for market share.

SoftBank subsidiary SIMI Pacific Pte has picked up 12,97,945 shares of Rs10 each at a premium of Rs12,895 in ANI Technologies - the parent company of Ola, regulatory filings with the Registrar of Companies showed.

While Ola has earlier decided to raise fresh funds from existing shareholders, none of the other investors seems to have participated in the latest funding round.

Softbank, which is planning to divest stake in e-commerce firm Snapdeal, is looking for alternative channels for its heavy investments in India.

Reports said the allotment of shares were done in November last year. However, it is not known whether this is part of a larger round of funding.

Although the valuation of Ola in the latest funding round is not known, it believed to have come at a lower valuation. In the previous round, in August 2015, it was valued at $4.8 billion. However, media reports in February pegged its valuation at around $3.5 billion.

The new round of funding by SoftBank would also reassert its position as the largest shareholder in Ola. SoftBank held an estimated 22.5 per cent stake in Ola, followed by Tiger Global (20.5 per cent).

Founded by Bhavish Aggarwal and Ankit Bhati in 2010, Ola has so far raised a little over $1.4 billion (including the new funding round) from investors such as Tiger Global and Matrix Partners. This includes $500 million in a Series F round from Scottish investment firm Baillie Gifford, China's Didi Chuxing and other investors in November 2015.

Earlier it had raised $400 million in a Series E round led by DST Global in April 2015 and $210 million in its Series D round led by SoftBank in October 2014.

According to sources, the move comes at a time when Softbank is working on selling Snapdeal, an e-commerce platform it invested heavily in India, to larger rival Flipkart.

The Bengaluru-based firm was aggressively looking at raising funds to compete with Uber, which, after losing its Chinese business to Didi last year, has now set sights on making India its top priority.

Though Indian Internet companies have seen a boom in user base, their valuations have come down as investors are now focussing on path to profitability and building a sustainable business model.

However, the pumping of private equity and venture capitalist funds have made start-ups a cash-burning affair - a big concern for investors.

Earlier this week, India's largest e-commerce firm Flipkart had raised $1.4 billion from Tencent, eBay and Microsoft in a round that saw its valuation fall from $15 billion to $11.6 billion now.