Ather Energy, a Bengaluru-based electric vehicle (EV) manufacturer, has received the much-awaited approval from the Securities and Exchange Board of India (SEBI) for its Initial Public Offering (IPO). This approval paves the way for the company to launch its public debut, marking a significant milestone in its journey. The IPO is set to raise over ₹3,100 crore through a combination of fresh share issuance and an offer for sale (OFS) from existing investors.
The Ather Energy IPO will comprise a fresh issuance of shares worth ₹3,100 crore, alongside an OFS (Offer for Sale) by its key stakeholders. Investors such as Tiger Global, Caladium Investments, National Investment and Infrastructure Fund (NIIF), and Binny Bansal’s 3 State Ventures, along with Ather’s co-founders Tarun Mehta and Swapnil Jain, are planning to offload their stakes in the company. However, Ather’s largest shareholder, Hero MotoCorp, with a 37.2% stake, has chosen not to participate in the OFS.
On December 23, Ather Energy received the SEBI observation letter, clearing the way for the company to proceed with its IPO. This letter signifies that Ather has passed all regulatory hurdles, and the process of listing can now move forward. This development brings Ather Energy closer to its goal of raising funds through its IPO and marking its presence in the public market.
Ather Energy's IPO is expected to raise a substantial amount of capital, allowing the company to strengthen its R&D, marketing efforts, infrastructure, and production capacity. Prominent investors involved in the offer include Tiger Global, Caladium Investments, NIIF, and Binny Bansal’s 3 State Ventures. Additionally, Ather's co-founders, Tarun Mehta and Swapnil Jain, are also set to offload their shares. Hero MotoCorp’s decision to refrain from participating in the OFS is significant, as it remains the largest shareholder of Ather Energy.
In addition to the public issue, Ather Energy plans to raise ₹620 crore through a pre-IPO placement. This pre-placement will help reduce the size of the fresh share issuance and give the company the flexibility to raise additional funds before the official listing. The funds generated from the IPO and pre-placement will be used for various strategic purposes, including bolstering Ather's research and development capabilities, expanding its infrastructure, enhancing marketing efforts, and scaling up production.
Founded in 2013, Ather Energy has quickly become a leader in the electric two-wheeler segment in India. The company designs and manufactures electric vehicles and battery packs, and it operates its own network of charging stations. Ather’s rapid growth has propelled it into the unicorn club, with a valuation of USD 1.3 billion, following a ₹600 crore investment from NIIF earlier this year. Between January and November 2024, Ather Energy sold 1.07 lakh electric two-wheelers, marking an impressive performance in the EV market.
Despite its growth, Ather Energy continues to face financial challenges. In FY24, the company reported a consolidated net loss of ₹1,059.7 crore, up from ₹864.5 crore in the previous fiscal year. This widening of the loss has been a concern, although Ather’s revenue from operations saw only a slight decline of 1.5% year-on-year, totaling ₹1,753.8 crore. As the company aims for a public listing, addressing these financial hurdles will be key to its long-term sustainability and growth.
Ather Energy’s upcoming IPO comes on the heels of Ola Electric's public listing earlier this year. Ola raised ₹6,145.6 crore at a valuation of USD 4 billion, though its shares had a subdued debut, listing at ₹75.99 against the issue price of ₹76. Ather's IPO could follow a similar trajectory, with market experts keeping a close watch on how the EV market continues to evolve.
Conclusion
Ather Energy’s IPO marks a major step for the company as it prepares to go public. With SEBI’s approval and a well-structured offer that includes fresh issuance and an OFS from key stakeholders, Ather Energy is poised to make a significant impact in the Indian stock market. The funds raised will help the company strengthen its position in the rapidly growing electric vehicle market. However, challenges such as financial losses must be addressed for long-term growth and profitability.