Bengaluru-based ride-hailing unicorn Ola’s financial arm Ola Money has raised about USD 27 million (INR 205 crores) from hedge fund Falcon Edge Capital and private equity investment firm Matrix Partners, as per the regulatory documents filed by the company. This is its first independent institutional fundraising.
Cayman Islands-based private equity company, Apoletto Managers, which is backed by Russian billionaire Yuri Milner, and Arun Sarin’s family office also participated in the round.
Local media Economic Times (ET), citing sources said the investment round values Ola Money at USD 250 million. Vikram Vaidyanathan, MD at Matrix Partners has joined the board of Ola Financial Services. Prior to this, the financial firm had raised USD 20 million in working capital debt, the ET report said.
“The financial services space in India and in our global markets is significantly underserved due to weak distribution, low trust and complicated products,” Bhavish Aggarwal, co-founder and CEO of Ola told employees in an email on Tuesday. “We have a once in a lifetime opportunity to change this with the reach and capabilities of our core ride-sharing platform.”
“With the ongoing COVID-19 crisis the need for product innovation in this space is even more relevant,” Aggarwal added.
The funding comes at a time when the SoftBank-backed cab-hailing giant is desperately trying to survive the slump due to the novel coronavirus outbreak. It is diversifying beyond its core business to find stable alternative revenue channels in areas like financial services and food. Fortunately for Ola, its financial services arm, Ola Money, can still attract investors’ money as fintech is expected to be one of the areas that would be remain relevant for the post-coronavirus world.
Last week, Aggarwal told his employees the company has seen its revenue tumble by 95% over the last two months as India went under lockdown. He also stated that the company would be letting go of 1,400 people across verticals including rides, financial services, and food business.
The company first launched Ola Money in 2015 to let users digitally pay for their taxi and auto fares, and in mid-2018, it started partnering with other companies like Oyo, Lenskart, and Saavn where users could pay using Ola Money. In the first half of 2019, the company launched a separate app for Ola Money, which could be used for utility bill payments, across online and offline merchants, and leading payment gateways as well. By November, Ola’s parent company ANI Technologies decided to hive-off Ola Money into a separate company to let it raise funds independently.
Currently, Ola Money provides services like short-term credit, mobile wallet, insurance, and utility bill payments. It competes with the likes of Paytm, PhonePe, AmazonPay, Google Pay, and soon-to-be-launched WhatsApp Pay.
“Ola is now the fifth-largest issuer (of credit) in the country and spends on the post-paid platform continue to grow,” the ET reported said, citing a source.
Meanwhile, the CEO of Ola Financial Services Nitin Gupta, who previously had founded payment services company PayU India, has resigned after more than two years at the company.
“Nitin is a solid entrepreneur and in his two year-plus years with us, has built a great foundation for our OFS [Ola Financial Serives] business,” Aggarwal said in the mail. Harish Abhichandani, Group CFO at Ola, will take over from Gupta as the interim CEO.