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Ola eyeing $600 million fund raise by year end to retain its pole position against Uber

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There is no end to the on-going rivalry between ride-hailing behemoths, Uber and Ola, operating and dominating the ecosystem in the country. Though Ola might have launched new notification features or inked a deal with BMW, the company is now gearing up to add another $600 million to its coffers, reports Bloomberg.

The company has been locked in a battle of discounts, new offerings and expanding driver services with the American ride-hailing giant Uber. To retain its pole position in the market, Ola has been open to fresh investments since its last $57.3 million fund raising round in December last year. Since then, Uber has merged its China operations with Didi and diverted its focus on making India is prime market. It has gulped another billion or so bucks from Malaysia’s public sector pension fund Kumpulan Wang Persaraan.

This investment will see participation from new and existing investors, especially SoftBank Corp. who is gearing up to re-enter India(after the exit of President Nikesh Arora) and lead the funding round. The negotiations are expected to close by the end of 2016 and give the Indian ride-hailing giant enough capital to aggressively drive operations for at least next 18 months. The talks are still in early stages but could value Ola well above $5 billion which one could argue is still well below Uber’s massive $63 billion.

Sources privy to the developments suggest that Ola is most likely to spend the fresh capital for recruiting drivers and helping them lease vehicles. This funding round will also give the company enough cushion to expand into more Tier 2 cities to maintian its lead over Uber in the country.

Moving into the next phase of the $10 billion ride-hailing market, this investment will be extremely crucial for Ola. It will not only help keep the momentum going but also give it a plush bank balance to fund its on-going geographical and category expansion. The company currently has over 450,000 vehicles running across 102 cities of the country as compared to Uber’s 350,000 and 28 cities respectively.

Uber has even deeper pockets now that it is out of China, which was a big drain on its resources, and it will now focus on India in a big way,

says Jaspal Singh, a partner at Valoriser Consultants.

In a struggle to raise new capital, Ola has also held preliminary discussions with automobile manufacturing giant General Motors but the talks are not expected to bear any fruits for the Indian ride-hailing giant. Ani Technologies, the parent company of Ola, has managed to bag $1.23 billion in eaight funding rounds which saw participation from marquee investors including Tiger Global, Accel Partners, SoftBank, Sequoia Capital, Didi Chuxing among others.

The company has recently inked a leasing partnership with Mahindra and Mahindra to offer new driver partners with an integrated package that comes with Mahindra cars, financing, insurance and services. The company has also debuted ‘Ola Offline’ service across key metro cities to allow users who are unable to use data on their phones. Using the same, the user will have to share his location via SMS to book a ride and secure driver details from Ola.

Uber India is also not far behind and has received commitment for investment of an additional billion dollars from founder and CEO Travis Kalanick, who’s called India a “strategic priority” for the company. In addition, it is also gearing up to launch ride-hailing service for bus and mini-vans in the country. It is expected to pilot in Bengaluru and be a part of Uber’s global initiative, also called Uber Everything. Uber is also planning to set up cab booking kiosks at railway stations to attract the millions of daily commuters.

In reply to Ola’s offline service, Uber has announced its new web service, using which, users can call a cab from the website itself, without the need of a mobile app. This battle between the local and foreign ride-hailing giant is only heating up with aggressive cash burn and service expansion. No one can yet predict the outcome of the same, will Ola bend to the might of Uber or will the American cab aggregator merge with Ola, acting like a scaredy cat yet again.

A hands-on guy fascinated by new apps, technologies and enterprise products.

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