Ratan Tata likely to lead $100 million funding round in Ola; valuation may touch $3.5 billion

RNT Capital Advisers, a venture fund set up by Ratan Tata, is likely to lead an investment round of $100 million, or Rs 650 crore in India’s top ride hailing app Ola.

Tata may invest $60 million, while rest will be invested by New York-based hedge fund Falcon Edge Capital. Besides, Ola is also in talks with other investors and looking get funding of $200 million.

If the deal goes through, Ola's valuation will rise to $3.5 billion.

"This new $100 million commitment (will happen) at a higher valuation,” ET quoted sources as saying.

Ratan Tata has invested in 30 startups earlier in his personal capacity and this Ola’s investment will be the first major transaction by RNT Capital. RNT Capital has set up a $250-million corpus with University of California Investments (UC Investments) to invest in Indian companies. UC Investments manages a corpus of $100 billion across endowment and pension funds, and announced the venture with Tata in February 2016.

Ola is also planning to work with the Indian Government and introduce electric vehicles in the top cities in the next three months.

ET quoted analysts and employees at Ola, saying Ola clocked about six million weekly rides on an average between September and December 2016, across all its offerings-cabs, auto rickshaws and shuttle buses. “The major source of revenues for both Ola and Uber-around 70-75% - comes from their economy services including Ola Micro, Mini and UberGo,” analysts told ET.

Ola is leaving no stone unturned to fight out the increasing pressure from Uber.

"Since Uber has been operational for 2-3 years, investors will start asking questions related to profitability,” an analyst tracking the space told ET on the condition of anonymity.