Lessons learnt from Snapdeal episode; Ola founders get more power, greater control

Taking lessons from the Snapdeal episode, in which its major investor SoftBank took decision to sell-out the online marketplace, Ola’s parent company modified regulatory terms and gave more powers to the owners.

ANI Technologies Private Limited, which owns and operates India’s top ride-hailing app Ola, amended the Articles of Association and modified some of the regulatory terms to give greater control to Ola founders Bhavish Aggarwal and Ankit Bhati.

As per the revised terms, SoftBank, which is Ola’s biggest stakeholder, and its affiliates need approval from Aggarwal, Bhati and company's board to purchase any additional shares of the company from other stakeholders.

SoftBank will own over 30% stake in Ola after the last financing round.

"The measures are aimed at giving the founders more power, even as they continue to dilute their shareholding to (access more capital) and take on Uber,” a banker who tracks the company closely told ET.

Aggarwal and Bhati will also be issued additional shares in Ola to ensure their holding does not fall below 10.9% from the current 12.01%.

ET reported they may get an additional four lakh shares, which will be worth Rs 520 crore.

This move comes after SoftBank initiated talks of Snapdeal’s sellout to Flipkart, which reflects concerns of deep-pocketed investors taking major decisions.

Snapdeal's CEO Kunal Bahl, in an email to employees in April, wrote that "our investors are driving the discussions around the way forward, for the company.

Ola raised $250 million from SoftBank at a valuation of around $3 billion in November 2016. During the negotiation for the round, SoftBank had offered to invest close to $1 billion in Ola which would have given it a controlling stake in Ola, one source told ET. "But Aggarwal decided to take less money from SoftBank and raise more capital from other investors, both existing and new,” ET quoted sources.