SoftBank-backed online cab booking service Ola is close to buying out its Bangalore-based rival TaxiForSure, reports The Times Of India citing sources. It says the deal is already closed and a formal announcement is expected in the next few weeks, adding that the deal will be a mixture of cash and equity.
The report pegs the deal size at around $200-$250 million while its sister publication Economic Times pegs the deal at about $200 million. TaxiForSure has declined to confirm or deny this to Medianama while we are still awaiting a response from Ola. Ola has declined to comment on this to ET.
TaxiForSure had last raised an undisclosed amount of Series C investment from Accel Partners, Bessemer Venture Partners & Helion Venture Partners in August last year, just three months after securing $10 million investment whereas Ola had raised a major $210 million round led by SoftBank in October last year, two months after it had raised Rs 250 crore from Steadview Capital, Sequoia Capital & Tiger Global.
A source told TOI that TaxiForSure had also recently raised a bridge round of $20 million from existing investors and was looking for additional funding to compete with Ola and Uber, however it later opted for a sale with existing investors also preferring a consolidation deal. It’s worth noting that Ola and TaxiForSure doesn’t have any common investors.
Taking on Uber
If the deal does go through, this acquisition could strengthen Ola’s leadership in the rapidly growing transport aggregation segment in the country. The company is currently operational in 50 cities while Uber is present in around 11 cities. It could also give them significant edge to compete against the heavily funded Uber which had raised a massive $1.2 billion last month and had also roped in Baidu as a strategic investor, who apparently had invested an additional $600 million into the company.
Earlier this month, it was indicated that Ola was in talks with another SoftBank-funded GrabTaxi for a global taxi alliance to take on the rival Uber and this alliance was apparently being driven by SoftBank Capital.
Interestingly, this development comes at a time when these cab aggregators are struggling with various regulator issues on their business model. These services have been banned by several transport authorities for “misleading consumers” by plying taxis with All India permits which is not allowed while offering point-to-point travel services in the city. The Delhi government is also trying to force-fit them as radio taxi players by revising their radio taxi guidelines which now mandates cab aggregators to opt for a radio taxi license.