Taxi-hailing app Ola has raised USD1.1 billion in a new round of funding led by China's Tencent Holdings and existing investor Japan's SoftBank Group, and claimed to be in advanced talks to raise another $1 billion from other investors. The taxi aggregator did not reveal the valuation at which it raised the latest round of funding.
The money comes as a booster shot for the homegrown startup to keep up its intense competition with American rival Uber as both firms are burning millions of dollars every day in incentives and discounts for India's $12 billion taxi market. Ola will use the funds to increase the number of its drivers and expand its presence to more cities, it said in a statement on Wednesday. It also plans to make significant technology investments into artificial intelligence and machine learning capabilities The Bengaluru-based firm, which has a majority market share, is present in 110 cities through bike, auto-rickshaw and electric car offerings.
"The transportation and mobility industries are seeing huge changes globally. Our ambition is to build a globally competitive and futuristic transportation system in India that will support and accelerate a nation on the move," Ola co-founder and CEO Bhavish Aggarwal said in a statement. Uber, which is present in about 30 cities, is caught in a slew of allegations including sexual harassment claims and a U.S. bribery probe.
It eventually led to Uber founder Travis Kalanick being forced to step down and replaced by new CEO Dara Khosrowshahi. ANI Technologies, which operates Ola, counts among its investors names like Soft-Bank Group, Tiger Global, Sequoia India and Accel Partners US. SoftBank, the largest shareholder in Ola, has reportedly pumped in about $300 million in this round.
While ANI Technologies is not a publicly-traded company, according to regulatory documents, its revenues registered a stellar growth at Rs 758.23 crore during 2015-16 compared to Rs 103.77 crore in the previous financial year. However, Ola suffered a consolidated loss of over Rs 2,311 crore -- about Rs 6 crore a day -- during that fiscal on account of heavy advertising, promotional expenses and other costs.
Tencent Holdings president Martin Lau said the strategic partnership with Ola makes it possible for Tencent to be part of the fast-growing ride-hailing space in the country. "Tencent is also aggressively investing in the country to cash in on the burgeoning Indian internet market." Earlier this year, Tencent was part of Flipkart's $1.4 billion fund raising that also saw participation from Microsoft and eBay.
MERU CABS STEPS UP LEGALBATTLE
Taxi company Meru Cabs has stepped up its legal challenge against local competitor Ola and U.S. rival Uber, alleging the firms are abusing their market position, and believes that planned investments in both by Japan's SoftBank underscore its view.The head of Meru Cabs said the company has filed four new complaints with the country's antitrust watchdog, claiming that Uber and Ola are abusing their dominance in four different cities by burning vast sums of investor funds to distort the market. "Even before there is any merger or alliance between the two through global investors, there is already a unified monopoly," Meru CEO said.