Ather Energy's IPO: A Major Milestone for India's EV Sector

Ather Energy, a prominent electric two-wheeler manufacturer based in India, is gearing up for its highly anticipated initial public offering (IPO). The company intends to raise a substantial INR 3,100 crore through the IPO, marking a pivotal moment in the evolution of India's electric vehicle (EV) landscape.

• Ather Energy, established in 2013 by Tarun Mehta and Swapnil Jain, has carved a niche for itself in the Indian EV market, offering a range of performance-oriented and family-friendly electric scooters.
• The company has filed its Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI), seeking approval for the IPO.

Ather Energy's IPO: A Blend of Fresh Issue and Offer for Sale

The Ather Energy IPO comprises a fresh issue of equity shares totaling INR 3,100 crore, aimed at bolstering the company's financial resources for future growth. In addition to the fresh issue, the IPO features an offer for sale (OFS) where existing shareholders will offload a significant portion of their holdings. This strategic move allows existing investors to partially exit their investment while providing new investors with an opportunity to participate in the company's future growth.

• The IPO's OFS includes the sale of 2,20,00,766 equity shares by existing shareholders.
• Key promoters Tarun Mehta and Swapnil Jain will each sell one million equity shares during the OFS.
• Other prominent shareholders, including Caladium Investment Pte Ltd, National Investment, Infrastructure Fund II, Internet Fund III Pte Ltd, 3State Ventures Pte Ltd, IITM Incubation Cell, and IITMS Rural Technology and Business Incubator, will also participate in the OFS, collectively selling a substantial portion of their holdings.

Strategic Allocation of IPO Proceeds

Ather Energy has outlined a well-defined plan for utilizing the proceeds from the fresh issue of equity shares in the IPO. The company aims to strategically allocate these funds to drive its long-term expansion and solidify its position as a leader in India's EV sector.

• A significant portion of the funds, amounting to INR 927.2 crore, will be directed towards establishing a new E2W manufacturing facility in Maharashtra, India.
• The proposed Factory 3.0 will expand Ather Energy's production capacity to a substantial 1.42 million E2Ws upon completion, enabling the company to meet the growing demand for electric scooters in India and potentially beyond.
• A substantial investment of INR 750 crore will be allocated towards research and development, further strengthening Ather Energy's technological leadership in the EV sector.
• The company plans to allocate INR 378.2 crore to repay or prepay outstanding debts, optimizing its financial structure and enhancing its overall financial health.
• Ather Energy intends to invest INR 300 crore in expanding its marketing efforts, increasing its market presence and reaching a wider audience in India.
• The remaining portion of the fresh issue proceeds will be used for general corporate purposes, ensuring the company's continued operational efficiency and strategic decision-making.

Pre-IPO Placement and Listing Details

In a strategic move, Ather Energy is also exploring a pre-IPO placement of up to INR 620 crore, which could potentially reduce the size of the fresh issue accordingly. This pre-IPO placement strategy allows the company to secure additional funding before the IPO, providing a more robust financial foundation for its future endeavors.

• Ather Energy's shares will be listed on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE), providing investors with ample opportunities to participate in the company's growth journey.

Ather Energy's Manufacturing Capabilities and Ecosystem

Ather Energy has established a strong manufacturing footprint in India, with its current production facility located in Hosur, Tamil Nadu. The company boasts an installed annual capacity of 420,000 E2Ws and 379,800 battery packs as of March 2024, signifying its commitment to meeting the growing demand for electric scooters.

• Ather Energy's commitment to innovation extends beyond its electric scooter lineup, encompassing the creation of a comprehensive ecosystem for enhancing customer convenience and promoting sustainable mobility.
• The company operates the Ather Grid, a fast-charging network for two-wheelers, with over 1,973 fast chargers across 233 cities in India.
• Ather Energy also offers home charging solutions alongside its electric scooters, further streamlining the charging experience for its customers.
• Ather Energy's distribution model is asset-light, with over 208 experience centers and 191 service centers strategically located throughout India. The company also has operations in Nepal, signifying its international ambitions.

Financial Performance and Growth Prospects

Ather Energy has demonstrated strong financial performance, with revenues reaching INR 1,753.8 crore in Fiscal 2024. The company is well-positioned for continued growth, driven by its experienced management team, commitment to innovation, and focus on sustainable mobility solutions. The IPO is expected to further fuel this growth trajectory, allowing Ather Energy to expand its operations, invest in new technologies, and strengthen its position as a leading player in India's EV market.

• The company's commitment to research and development will ensure it remains at the forefront of technological advancements in the EV sector, creating innovative solutions that cater to the evolving needs of Indian consumers.
• The expansion of Ather Energy's manufacturing capacity will enable the company to meet the increasing demand for electric scooters in India, while its growing distribution network will provide wider accessibility to customers across the country.