Homegrown ride-hailing firm Ola on Tuesday announced the launch of its service in New Zealand, its third international market after Australia and the UK, as it looks to emulate rival Uber’s global model at a time when it is trying to woo new investors to back it.
The company has started offering rides to passengers in New Zealand’s three largest cities Auckland, Wellington and Christchurch, which have a combined population of just around 2.2 million.
“Entering New Zealand is an important step for Ola, and the ridesharing industry here. Over recent weeks, we’ve received enthusiastic feedback from drivers across Auckland, Wellington and Christchurch,” said Brian Dewil, Country Manager for Ola in New Zealand.
Ola said it will offer a discount of 50 per cent on all rides for its customers in New Zealand for the first one month, a move to get them to experience its service over rival Uber’s. It is also charging just nine per cent as commissions from drivers and will release payments to them daily.
Kicking off its international expansion drive at the start of this year, Ola is looking to tap more mature markets for ride-hailing even if the populations of the cities it is entering are far lower than in its home market.
For instance, Bengaluru, which is one of Ola’s largest markets in India has a population of 11 million, while the whole of the addressable market in the three cities in New Zealand is just 2.2 million. Experts say while India can drive volumes for ride-hailing, international markets continue to drive value.
Business Standard had first reported in January that Ola was looking to enter Australia and New Zealand, both markets where its rival Uber already had a foothold. Despite its rivals leg up, it was seen that the ride-hailing market in these regions had not been tapped to their full potential yet.
Ola’s international expansion is coming at a time when it is out in the market to raise a fresh round of funds from a new set of investors. While the company claims its India operation will be profitable by the end of the current fiscal, the $1 billion fundraising effort is seen as a move to diversify its investor base.
In October the company raised $50 million from two Chinese funds, while Singapore’s state fund Temasek picked up secondary shares worth $200 million a few months earlier. The current valuation of Ola is at around $4.3 billion, still down from its $5 billion peak, but if reports are to be believed, the company is looking to raise $1 billion at a valuation of $7 billion.
Ola is hoping that investors see value in its expansion overseas, similar to how investors rewarded Uber for being a global ride hailing major. While India will continue to be Ola’s largest market by both volumes and in terms of the revenue it drives owing to the millions of rides the company clocks on a single day here.