Automotive manufacturers Hyundai and Kia agreed today to invest a total of $300m in India-based ride hailing service provider Ola through a strategic partnership agreement.
Founded in 2011 as OlaCabs, Ola operates an on-demand ride app that is currently available in more than 125 cities across India, Australia, New Zealand and the UK. It makes use of a network of more than 1.3 million private and traditional, metered taxi drivers.
Ola has also launched tangential services such as a mobile payment platform and a credit service, Ola Money Postpaid, that allows users to accumulate up to a fortnight of ride charges before settling their bill.
The company entered the food delivery sector in 2017 when it acquired the Indian business of online food ordering platform Foodpanda. Delivery Hero, Foodpanda’s parent company, received an equity stake of unspecified size in Ola as a result.
Ola formed an electric vehicle-focused spinoff called Ola Electric Mobility earlier this month, but while the company said it would use part of the $300m investment to build out its electric vehicle fleet and related infrastructure in India, it did not explicitly identify the business as a beneficiary of the funding.
Hyundai and Kia will collaborate with Ola on developing products to operate and manage fleet vehicles through the deal. They agreed a similar investment and partnership deal with Southeast Asia-based ride hailing service Grab in November 2018.
Proceeds will also go to vehicle maintenance and repair services, and the growth of Ola’s fleet of drivers to 2 million by 2022, through offerings such as vehicles leasing and instalment payments.
Ola has raised approximately $2.9bn to date. It was in the process of raising a $1bn series J round as recently as last month, but it is unclear whether Hyundai and Kia’s commitment forms part of that round.
The series J round stood at $230m at that point and includes Lyon Assets, J3T Ventures, Steadview Capital, Sailing Capital, China-Eurasian Economic Cooperation Fund and private investors Sachin Bansal, Raymond Cahnman, Tina Price and Steven Price.
The company’s shareholders also include internet group Tencent, which led a $1.1bn funding round in 2017 with participation from telecommunications conglomerate SoftBank, Falcon Edge Capital, RNT Capital Advisors and Tekne Capital Management.
Ride hailing provider Didi Chuxing had participated in Ola’s $500m series F round in 2015 together with SoftBank, Baillie Gifford, Falcon Edge, Tiger Global Management and DST Global.
The company’s earlier backers include Accel, Matrix Partners, Sequoia Capital, JS Capital, Parkwood Bespin, ABG Capital, Fii Ltr Focus Fund and Vanguard Group.
Euisun Chung, executive vice-chairman of Hyundai, said: “India is the centrepiece of Hyundai Motor Group’s strategy to gain leadership in the global mobility market and our partnership with Ola will certainly accelerate our efforts to transform into a smart mobility solutions provider.
“Hyundai will proactively respond to market changes and persistently innovate to deliver greater value to our customers.”
– Picture of Ola co-founder and CEO Bhavish Aggarwal, and Euisun Chung courtesy of Hyundai Motor.
