In a move to prevent a hostile takeover, cab hailing app Ola has rewritten the rules of engagement to restrict its investors, including SoftBank Group, to buy more company shares.
According to documents filed with the Ministry of Corporate Affairs, SoftBank and its affiliates will need the approval of Ola founders Bhavish Aggarwal and Ankit Bhati, and the company's board to purchase additional shares from other stakeholders.
The changes to the articles of association for ANI Technologies Pvt. Ltd, which operates Ola, have also strengthened the founders’ rights by ramping up their holding in the total share capital of the company.
According to the latest RoC filings, Aggarwal and Bhati will receive 277,820 and 126,403 additional shares, respectively, subject to the closing of its ongoing fund raising exercise.
The founders’ collective shareholding before this round stood at 12.1% and the additional shares will now take their total stake to 12.38%. The founders shareholding is not expected to go below 10.9% on completion of the ongoing exercise.
Ola has already raised $250 million from SoftBank and $104 million from Tata’s UC-RNT fund and Falcon Edge.
Media reports have pegged the total targeted sum at a little over $500 million.
E-mail queries to Ola and SoftBank did not elicit any response till the filing of this report.
Additionally, Ola has also restricted the share transfer rights of its investors, who cannot transfer a stake that represents 10% or more of the total share capital of the company without the founders’ approval. However, where an investor is transferring shares to one of its affiliates, approval from the founders is not required.
This move is being seen as a possible checks-and-balances act by Ola following the shake ups being engineered by SoftBank on its Indian investments. According to estimates made by VCCircle last year, SoftBank, with a 22.5% stake and Tiger Global with a 20.5% are major shareholders of Ola.
Last week, SoftBank had reported a valuation loss of $1.4 billion on its two flagship investments in India, cab-hailing app Ola and e-commerce marketplace Snapdeal, as part of its annual report.
SoftBank, whose Indian investment portfolio includes Inmobi, Snapdeal, Oyo, Grofers and Hike, is going aggressive, after its Indian bets failed to yield positive returns.
The Masayoshi Son-led Japanese internet conglomerate is currently leading the biggest merger in the Indian e-commerce space, engineering a Flipkart-Snapdeal combine and a deal is likely to be struck this week.
SoftBank is also likely to invest about $1.9 billion into One 97 Communications Ltd, which runs digital wallet firm Paytm. The investment will not only get SoftBank a 20% stake, but also a slice of the Indian payments pie.
Mint had report that Bigbasket and Grofers, in which SoftBank is an investor, have also initiated preliminary level talks for a merger.
However, SoftBank still remains bullish on India. Son has committed to invest up to $10 billion in the country in 10 years, and has so far pumped in a little over $3 billion.