Ola CEO Acquires his Brother’s Firm AVAIL Finance
Ola has entered into an agreement to acquire Avail Finance, a financial services startup. Avail Finance’s leadership team will be joining Ola Financial Services. ANI Technologies, the parent company of Ola, owns 100% holding in Ola Financial Services. Ola is likely to close the deal at a $50 million share.
Avail Finance was founded in 2017 by Ankush Aggarwal, brother of Ola CEO Bhavish, and Tushar Mehndiratt. Both Bhavish and Ankush are directors of the firm. Ola and Avail Finance also have common investors: Alpha Wave Global and Matrix Partners.
Avail Finance caters to India’s blue-collared workforce who are currently underserved by organized lending institutions. It provides collateral-free personal loans of up to Rs 20,000 to meet their financial needs. According to the company, there is no interest for a personal loan of Rs 5,000 for a month. Avail Finance had been using its own money to lend, circumventing a key RBI rule that allows only banks and licensed non-banking financial companies (NBFCs) to lend. Avail finance has been struggling with its revenue operation which decreased 20% last year during the pandemic. It also laid-off employees.
The merger is a lifeline for Bhavish. Some investors were apprehensive about pushing this through because it would become a related party transaction. But Bhavish only needs a simple majority and will be able to push the deal through.
Aggarwal’s move to merge his brother’s firm with Ola comes at a time when the firm is battling multiple headwinds. It is looking to raise $150-$200 million at a valuation of $5 billion compared to its last round which happened at $7 Billion as its IPO plans are delayed.
“The acquisition is a key step in Ola’s broader push into the fintech space as it looks to build a mobility-focused financial services business under Ola Financial. With this acquisition, Ola Financial Services will further strengthen its role in the underserved segments that comprise blue-collar workers such as Ola’s driver-partner ecosystem. The deal is subject to shareholder approval.”
The Firm Stated
The financial terms of the agreement were not disclosed by Ola, which owns a 9% share in Avail Finance. Ola had invested ₹800 crores into its financial services business last year.
