Bhavish Aggarwal pledges more Ola Electric shares for loans as stock continues to slide

mint A review of the shareholding pattern of Bengaluru-based Ola Electric and disclosures to stock exchanges showed that Aggarwal had put up the additional stake as collateral for a loan from Aditya Birla Capital Ltd. The company did not disclose the size of the loan or which group company it was directed to. With this, just over a tenth of Aggarwal’s 30.02% stake in Ola Electric has been subscribed.

Using stocks as collateral is a method used by entrepreneurs to raise money for their ventures. Typically in these arrangements, the promoter is required to transfer the pledged shares to the lender if the company is unable to repay the loans on time. Backers of companies like Vedanta had previously pledged to fund their ventures with all their shares.

Additional risk for shareholders

While it is not uncommon for promoters to pledge or mortgage their shares to borrow capital, Aggarwal’s move is significant as he uses his stake in publicly listed Ola Electric to raise money for his privately held AI startup Krutrim.

Since going public, the company has pledged its shares three times to raise loans. It had previously committed to fund Ola Electric shares to Krutrim in November 2024 and February 2025. These commitments were made to institutions such as Axis Trustee Services, Avendus Structured Credit Fund II, Avendus Finance Private Ltd and Incred Credit Opportunities Fund I. Krutrim has been out of startup since its founding in April 2023.

Shriram Subramanian, founder of proxy advisory firm InGovern Research Services, said lenders to a listed company sometimes insist on promoters pledging shares to raise funds for the company. However, this is different from when the promoter pledges shares of the listed company to finance a private venture.

“The benefits of pledging shares to raise money to expand the business of a publicly traded company pass through to all shareholders. However, if this happens for a private company, then shareholders have to bear the risk that this private company may not perform well and lenders will enforce the pledge.”

When Elon Musk bought Twitter (currently This high-risk move left Musk in a precarious position, as the fate of his social media empire is now tightly tied to Tesla’s stock performance.

Stock fell, collateral increased

Ola Electric’s shares have taken a hit since the company went public ₹6,146 crore initial public offering (IPO) in August 2024. ₹76 per share, stock ₹At the end of trading hours on November 10, it was 44.3; A 41% decrease. The company’s shares have fallen 36% since Aggarwal first pledged Ola Electric shares in November. Bloomberg In June, Aggarwal reportedly had to top up his security deposit with an additional amount ₹20 crore when the stock slides downwards ₹50.

Additionally, the company cut its revenue forecast for FY26 by almost a third. ₹3,000-3,200 crore during its last earnings announcement, causing the stock to fall nearly 5% twice in a single trading session in a week.

Ola Electric has also been looking for ways to raise funds for itself in the last six months due to a decline in sales. Late last month the board approved raising equity funds ₹1,500 crore. This was five months after approving the fundraiser. ₹1,700 crore through issuance of irrevocable debt ventures (NCDs) to refinance its debt. The company needs to pay the total ₹2,114 crore debt and interest as of FY30, according to statements.

“We have some debt obligations. Again, we showed that in a chart in the note. We will refinance some of that debt, not term loans, but some of the corporate debt we took out before the IPO,” Aggarwal said in the company’s June quarter earnings call on July 14.

Not top dog anymore

Credit rating agencies stated that the company would have to resort to raising more funds if its sales continued to decline. “If unit sales volume growth continues to be affected, the company will have to explore further capital raising options, which poses a financing risk,” credit rating agency Icra said in its May 1 note for Ola Electric Technologies (OET), the company through which Ola Electric Mobility manufactures and sells its vehicles. he said. OET is responsible for 99% of the listed entity’s income.

Ola Electric’s sales fell by almost half year-on-year to 52,666 units in the September quarter as it lost its leadership in the electric two-wheeler market. TVS Motor Company, which is currently experiencing an increase in sales, is at the fourth position after Bajaj Auto and Ather Energy.

Questions sent to Ola Electricity remained unanswered.