Ola Electric Did The Right Thing By Pricing IPO Lower Than Last Valuation: Rajesh Sawhney

SUMMARY

“Ola did the right thing by pricing the company’s IPO lower than its last valuation,” GSF Accelerator founder Rajesh Sawhney said

With the Indian equities market in a bull market, Sawhney said this is the right time for companies with strong fundamentals to go for IPO

Investors and founders have learnt lessons from funding winter and are showing maturity now in terms of startup valuations,” ICICI Ventures' director Tej Kapoor said

Listed escooter maker Ola Electric’s decision to launch its initial public offering (IPO) at a valuation lower than its last private valuation has received a thumbs up from Rajesh Sawhney, founder and chief executive of GSF Accelerator.

“Ola did the right thing by pricing the company’s IPO lower than its last valuation,” the serial entrepreneur said at Inc42’s MoneyX 2024 event on Thursday (September 26).

It is pertinent to note that Bhavish Aggarwal-led Ola Electric’s IPO valued the electric vehicle startup at $4 Bn, an almost 25% discount to the $5.4 Bn valuation based on the last funding round in September. The valuation was also considerably lower than the $7 Bn that the company was initially targeting.

“Ola Electric and ixigo left money on the table for new investors during their IPO,” Sawhney said, adding that ultimately they were rewarded by the increase in their stock price after listing.

With the Indian equities market in a bull market, Sawhney said this is the right time for companies with strong fundamentals to go for IPO.

Sawhney was part of a panel discussion with Hiro Mashita, director at Sin Growth Partners & managing director at M&S Partners, and Tej Kapoor, who quit VC firm IvyCap Ventures to join ICICI Ventures as its director and partner in May.

Speaking about the startup funding boom of the pandemic, Kapoor said that many investors withdrew some of their capital at that time due to high valuations. However, he said that the following funding winter provided a reality check.

“Investors and founders have learnt lessons from funding winter and are showing maturity now in terms of startup valuations,” he added.

It is pertinent to note that not only the startup funding declined after the start of the funding winter in 2022 but startups also saw multiple valuation cuts by their investors after it. BYJU’S, which became a decacorn and was the most valued Indian startup, is currently undergoing insolvency proceedings.