Ola, in a statement, said SoftBank and new US-based financial investors, apart from Tencent, had participated in the funding round.
“Our ambition is to build a globally competitive and futuristic transportation system in India that will support and accelerate a nation on the move,” said Bhavish Aggarwal, co-founder and chief executive officer of Ola. “Our new partners share our passion for building the future of transportation in India together and we look forward to learn and benefit from their global perspectives and ecosystems.”
Ola says the capital will allow it to make strategic investments in its supply chain and technology. A significant investment will be made in artificial intelligence and machine learning capabilities to help solve some of the unique mobility problems, such as lacking infrastructure and heavy traffic in metros.
It added that it would be continuing to hold talks with other investors to raise a further $1 billion as part of the same funding round, to bring the total size of the round to $2 billion.
Business Standard had reported on October 3 that SoftBank would not pump in any additional capital immediately, instead committing to invest another $1 billion if Ola achieved certain goals that had been set.
The Japanese investor has backed Didi Chuxing in China and Grab Taxi in Southeast Asia, giving it a keen understanding of the ride-hailing market. One of the primary asks of SoftBank from Ola is to deepen its play in India’s electric mobility space, which founder Masayoshi Son is taking a keen interest in.
“Ola’s unique local offerings are tailored to India’s burgeoning transportation needs. The strategic partnership with Ola makes it possible for Tencent to be part of the fast-growing ride-hailing space in the country. We look forward to helping Ola further develop India’s transportation solutions,” said Martin Lau, president of Tencent Holdings.
The funding comes at a time when SoftBank is in the closing stages of finalising a massive investment in Ola’s chief rival Uber. While the Japanese firm, along with a few other investors, will pump in between $1 billion and $1.25 billion at a valuation of $68 billion, a much larger investment in the tune of $20 billion is planned to purchase shares of existing investors at a much lower valuation.
While global publications have reported that a truce between Uber and Ola in India isn’t among the terms put forth by SoftBank for the investment in Uber, if the deal goes through, consolidation in India’s ride hailing space is said to be inevitable. For now, it looks as though Ola has the upper hand in India and will absorb its rival Uber’s unit here.