India's radio taxi major Ola is in negotiations with SoftBank and Tencent to raise up to USD 2 billion in fresh funding at a time when its major competitor Uber is recovering from a management exodus which saw founder Travis Kalanick ousted from the role of chief executive officer.
The deal on the first USD 1 billion is expected to be closed soon and will not see participation from Ola’s largest investor, SoftBank. Chinese Internet giant Tencent will lead the sub-round with an investment of $450-500 million, apart from the participation of two global venture capital firms, people familiar with the development said.
Additionally, the UC-RNT Fund, which is born of a partnership between former Tata Sons chief Ratan Tata and the University of California’s investment arm, could plough $50 million into Ola.
Tata is already an investor in Ola in his personal capacity. The Ola spokesperson was not available for comment. According to a person who did not want to be named, SoftBank has set terms for Ola to receive the second part of the $2-billion planned investment. Ola will have to deliver on certain goals the Japanese investor has set, drawing from its knowledge of the ride-hailing business with investments in Didi Chuxing and Grab Taxi.
The valuation at which Ola will raise the fresh funding could not be ascertained immediately. In its previous funding round, the firm had settled for a valuation of $3.5 billion, a 30 per cent reduction from its peak value of $5 billion, when it raised around $330 million from SoftBank, UC-RNT and Falcon Edge Capital in November last year.