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The Competition Commission of India (CCI) has brushed aside monopolistic concerns to give an official nod to Hyundai and Kia’s investment in Ola and Ola electric. Following the regulatory approval, both (Ola as well as Ola Electric) has jointly received Rs 2,244 crore from South Korean auto giants. As per the regulatory filings with MCA, Hyundai was allotted 8,04,592 shares that are worth nearly Rs 1,709.75 crore while Kia received 2,01,148 shares for almost Rs 427.43 crore.
CCI immediately raised a red flag after earlier this year Hyundai and Kia announced that they would invest nearly $300 Mn in Ola and Ola electric. The regulatory body’s concern was that Hyundai’s investment would lead to monopolistic situation, considering that the latter had already invested in quite a few cab hailing startups including Revv. However, now these concerns stand completely nullified.
This news would certainly give boost to Ola that is currently in the midst of preparing for its much anticipated IPO, which is slated to hit the market in next two years. India’s home grown cab hailing major will also be buoyed by its apparently robust balance sheet, with the company showing significant growth in revenue at Rs 2543.63 in FY19 while narrowing the losses to Rs 2592.92 crore.
Off late, India’s unicorn startups like Paytm and Druva have been publicly assertive about its forthcoming IPO plans. However, these IPO seeking startups have quite a few important lessons to learn from the collapse of WeWork’s IPO and market’s lackluster response to Uber’s IPO. And going by the market mood, the lesson is quite clear; the market would repose its faith only on those companies that boost strong balance sheets and robust revenue model. The highly inflated market valuation numbers won’t account for much, something that is already been proven in the case of WeWork and Uber’s IPOs.
