South Korean automaker Hyundai Motor in talks with Ola, may invest $250 million in latest funding round

South Korea's Hyundai Motor is reportedly planning to invest $250 million in Bengaluru-based Ola, which will take the ride-hailing major's valuation to over $6 billion, a media report said.

The deal, which is at advanced stages of discussion, is likely to close in the next few weeks, said The Times of India report. The investment will give Hyundai about a 4 percent stake in the Indian ride-hailing major. If everything goes through, the funding will be the first major investment by a top auto company in Ola, the newspaper report said.

Ola is planning to raise around $400 to $500 in the current funding round. Last month, Flipkart co-founder Sachin Bansal invested about Rs 650 crore in Ola, giving the Indian ride-hailing company more ammunition to compete with rival Uber.

The investment was in Bansal's personal capacity and was also the largest financing by an individual in Ola to date. In January, Ola had issued shares worth Rs 150 crore to Bansal as part of series J round of funding.

 South Korean automaker Hyundai Motor in talks with Ola, may invest 0 million in latest funding round

Representational image. Reuters

"Ola is one of India's most promising consumer businesses, that is creating deep impact and lasting value for the ecosystem," Bansal had said. In October last year, the Bengaluru-based company had announced raising $1.1 billion funding from China's Tencent Holdings and SoftBank Group.

Ola is locked in a battle for market leadership with US-based rival Uber in India and other markets like Australia, New Zealand and the UK.

The Indian company has been aggressively ramping up its business as well as hailing platform and food delivery operations (through Foodpanda).

Hyundai, on the other hand, recently suffered a first net loss in eight years and suspended production at one of its Chinese plants as slowdown bit the company.

In January, South Korean's auto major surprised the market by posting its first quarterly net loss in at least eight years as its vehicle sales slumped in the key China market.

Hyundai has been grappling with a lack of attractive models and strong branding in China, its biggest market where the auto industry's sales contracted for the first time in more than two decades last year due to the Sino-US trade war and the phasing out of tax cuts on smaller cars.

The automaker, which together with affiliate Kia Motors was the third-biggest automaker in China until 2016, is now saddled with overcapacity, with its 2018 China sales falling short of target and reaching only half of its total production capacity.

Hyundai reported a net loss of 129.8 billion won ($114.95 million) for the fourth quarter ended in December compared with the average 784 billion profit estimate of analysts.

In November last year, Hyundai raised its stakes in growing Southeast Asian markets with a $250 million investment in Singapore’s Grab, its second in the ride-hailing firm.

The South Korean automaker is chasing rivals in the race for new-age transportation.

Hyundai has joined the global race to invest in mobility firms as individual car ownership is widely expected to fall due to in part to increasing car-sharing options in big cities.

“Not only Hyundai but all global auto manufacturers have realized that generating revenue solely from selling vehicles is not a sustainable, viable option,” Hyundai’s chief innovation officer, Chi Young-cho, told reporters in Seoul in November 2018.

“It is better to disrupt than being disrupted,” he had said.

With agency inputs

Updated Date: Mar 08, 2019 12:26:56 IST