Transportation app Ola on Wednesday said it has raised $1.1 billion in funding led by Tencent Holdings and is in “advanced talks” to close an additional $1 billion to conclude a total mop-up of over $2 billion.
The funding will help Ola bolster its position against the US-based rival Uber. The two are locked in an intense battle for leadership in the Indian market and have pumped in millions of dollars in driver incentives and discounted rides for customers.
The company did not disclose the valuations at which funds were raised.
Existing investor SoftBank, in addition to other new US-based financial investors, has also participated in this round, Ola said in a statement.
It, however, did not disclose the time period when the funding was raised or the timeline for the closure of the total $2 billion round.
According to industry sources, who did not wish to be named as the discussions are private, the $1.1 billion came in over the last 4-6 months in tranches. The additional $1 billion funding is also likely to be closed in the next few weeks, they added.
“Tencent Holdings Limited, a leading Internet company in China, will bring significant expertise to Ola as it furthers its leadership position across the mobility market in India,” the firm added.
Ola said it will make strategic investments in supply, technology and innovations “to build for the country’s unique transportation needs”. It has operations across 110 Indian cities.
The cab aggregator also plans to make significant technology investments into artificial intelligence and machine learning capabilities.
ANI Technologies, which operates Ola, counts among its investors names like SoftBank Group, Tiger Global, Sequoia India and Accel Partners US.
While ANI Technologies is not a publicly-traded company, according to regulatory documents, its revenues registered a stellar growth at Rs 758.23 crore during 2015-16 compared to Rs 103.77 crore in the previous fiscal.
However, Ola suffered a consolidated loss of over Rs 2,311 crore — about Rs 6 crore a day — during that fiscal on account of heavy advertising and promotional expenses and other costs.
“The transportation and mobility industries are seeing huge changes globally. Our ambition is to build a globally competitive and futuristic transportation system in India that will support and accelerate a nation on the move,” Ola co-founder and CEO Bhavish Aggarwal said in the statement.
Ola looks forward to learn and benefit from Tencent’s global perspectives and ecosystems, he added.
Martin Lau, President of Tencent Holdings, said the strategic partnership with Ola “makes it possible for Tencent to be part of the fast-growing ride-hailing space in the country”.
Tencent is also aggressively investing in the country to cash in on the burgeoning Indian Internet market.