SoftBank-backed Ola targets IPO process by March-end 2021, cut staff by up to 5% - sources

BENGALURU (Reuters) - Indian ride-hailing firm Ola, backed by Japan's SoftBank Group Corp 9984.T, aims to begin the IPO process by the end of March 2021 and plans to cut its workforce by up to 5% as part of preparations, said people with direct knowledge of the matter.

FILE PHOTO: Employees work inside the office of Ola cab service in Gurugram, previously known as Gurgaon, on the outskirts of New Delhi, India, April 20, 2016. REUTERS/Anindito Mukherjee

The news comes as tech investor SoftBank smarts from the abandoned share sale of major portfolio firm WeWork, as well as its first quarterly loss in 14 years after an $8.9 billion hit to its Vision Fund, through which it is Ola’s top stakeholder.

Ola, officially ANI Technologies Pvt Ltd, is India's home-grown rival to U.S. peer and fellow SoftBank portfolio firm Uber Technologies Inc UBER.N. Local media have previously reported Ola was targeting an initial public offering (IPO).

“We are working for IPO-readiness and hope to formally start the process by the end of fiscal 2021,” said a senior Ola executive aware of the developments.

As part of that effort, Ola has engaged McKinsey & Company and EY as consultants, said the executive, who declined to be identified as the matter was private.

At the same time, Ola plans to reduce its 4,500-strong permanent workforce by 4% to 5%, said another person.

“With a view to become more nimble and have a sharper focus on growth and profitability, we are redesigning the organisation to build a structure that strengthens and leverages our local and global scale and enables faster decision making across all of Ola’s group companies,” Ola said in a statement.

In a letter to employees dated Nov. 27 and seen by Reuters, Chief Financial Officer Harish Abhichandani said Ola needed “to refresh the way” it runs operations and redesign the business.

“As part of this redesign, it is imperative to right-size and bring efficiencies in our core mobility business,” he wrote.

Ola was founded in 2010 and operates in over 250 cities. It reported a 16% rise in revenue at 21.55 billion rupees ($300.96 million) for the year ended March, while its net loss of 11.6 billion rupees was almost 60% smaller than the year earlier.

An IPO would bring fresh scrutiny to the business model of its main backer SoftBank and its ride-hailing assets - which form a major part of the $100 billion Vision Fund - following a sell-off in the stock of already-listed Uber.

IPOs are essential for SoftBank to extract cash from its investments. However, since the WeWork debacle, the firm has had to lower expectations for its IPO pipeline.

Reporting by Nivedita Bhattacharjee; Additional reporting by Sam Nussey; Editing by Christopher Cushing