EV maker Ather Energy looks to raise $370 million, hopes for $2 billion valuation

Ather Energy, the Indian electric scooter manufacturer, has filed its draft prospectus, aiming to raise approximately $370 million through its initial public offering (IPO). The Bengaluru-based startup is looking to capitalise on the growing demand for electric vehicles in India, the world’s third-largest automobile market. According to sources familiar with the situation, Ather is seeking a valuation between $1.5 billion and $2 billion.

The company plans to issue new shares as part of the IPO, along with the sale of up to 22 million shares from existing investors. However, Ather Energy has not commented on these developments yet. The proceeds from the IPO are expected to be utilised for expanding the company’s manufacturing capabilities, particularly with the construction of a new facility in Maharashtra. Additionally, funds will be allocated for repaying existing debts and furthering research and development efforts.

Riding the wave of India’s EV growth
Ather’s move to go public comes at a time when India’s electric vehicle (EV) market is heating up, driven by government incentives and the increasing cost of fuel. The Indian government has set ambitious targets, aiming for 30 per cent of private cars and 70 per cent of commercial vehicles to be electric by 2030. As a key player in this rapidly growing sector, Ather is looking to strengthen its position through the IPO, particularly as competition intensifies.

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Backed by Hero MotoCorp and India’s sovereign wealth fund, the National Investment and Infrastructure Fund, Ather Energy holds about 19 per cent of the electric two-wheeler market as of late August, according to government data. Despite this strong position, the company faces stiff competition from other well-established automakers and heavily funded startups. Ola Electric, which recently went public, leads the market with a 31 per cent share, followed closely by TVS Motor with 20 per cent and Bajaj Auto at 19 per cent. Ather’s investor, Hero MotoCorp, lags behind with just 5 per cent of the market.

Ather’s financial standing
Ather was founded in 2013 by Tarun Mehta and Swapnil Jain and has come to be known for its innovative approach to electric scooter design. Impressively, 80 per cent of the company’s key components are developed in-house, showcasing its commitment to controlling the quality and uniqueness of its products. Over the years, Ather has raised approximately $500 million across several funding rounds, according to data from Tracxn.

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With Axis Capital, HSBC, JM Financial, and Nomura leading the IPO efforts, Ather Energy is positioning itself to attract significant investor interest. As India’s electric vehicle market continues to grow, the success of Ather’s IPO could help it stay competitive in this fast-evolving industry.

Despite its market share and strong backing, Ather reported a loss of $126 million on revenue of $213 million for the fiscal year ending March 2023. These figures highlight the company’s need to raise additional funds to further its growth, expand production, and reduce costs as it scales up.