Ola, Uber’s fiercest rival in India, has raised USD 1.1 billion from investors including Chinese internet giant Tencent and Japan’s SoftBank.
The funding will give the ride-hailing service firepower to continue fighting Uber in one of the world’s largest mobile markets.
Ola revealed it is also in advanced talks to raise another USD 1 billion from different investors, bringing the total funding round to just over USD 2 billion. Following the close of the round, Ola will have a valuation of around USD 7 billion, a source familiar with the situation told CNBC. The source also said that U.S. investors will be involved in the second tranche of the funding round.
The start-up, which is present in 110 cities across India, said it will use the money to invest heavily in artificial intelligence technology and penetrate new areas of the country.
Timing of the deal could work in Ola’s favor given the troubles at Uber.
Still, Ola has been battling hard against its American rival, trying to create localized products. Users can hail rickshaws and motorbikes, for example, which are popular in large Indian cities. Uber has followed suit, launching similar products.
Ola will focus on boosting its leasing business with the new money, according to a source. It leases cars to drivers who want to drive for Ola in order to boost supply. The funding will also allow it to invest in electric cars.
The source also told CNBC that the company is prioritizing expanding across India ahead of moving into international markets, though it is not ruling that out.