IPO-bound Ola is looking to expand its financial services business and also obtain an NBFC licence through the acquisition route, sources said. Ola is said to be in talks to acquire at least 3 companies to augment its engineering, product as well as loan management capabilities to support the rapid growth in the financial services business, two sources with direct knowledge of the development said.
The companies being considered for acquisition are registered non-banking financial companies (NBFCs), which offer both secured and unsecured loans. Ola will leverage the acquisitions to provide vehicle financing as well as personal loans, they said. While the company did not immediately offer any comments, sources said Ola has lined up aggressive expansion plans for its financial services business.
As per its RoC (Registrar of Companies) filing, Ola had recently invested Rs 786 crore in its financial services business Ola already offers its Buy Now, Pay Later product – Ola Postpaid that is available to over 40 million customers and is projected to grow to 100 million customers in the next six months. Its vehicle financing business is already growing rapidly on the back of the success of Ola Electric which has already become India’s leading EV manufacturer as well as the used car business, Ola Cars, which is on a rapid growth trajectory and is set to sell USD 2 billion GMV(gross merchandise volume) in its first year of launch.
In addition to ramping up its lending business, Ola is simultaneously looking to get insurance and insurance broking licences to further strengthen its ability to offer innovative products like telematics-based pay-per-use motor vehicle insurance, sources said. Ola has to date sold nearly 700 million policies and the GMV of its insurance business grew over 3x in 2021. It is now projecting a Gross Written Premium of over Rs 1,000 crore in 2022 and will add multiple new offerings including an insurance marketplace for gig economy workers beyond its driver-partners.
India’s auto loan industry, growing at 8 per cent compound annual growth rate (CAGR) is expected to reach USD 60 billion by 2026. Meanwhile, auto insurance, which is a USD 9 billion industry in FY21 is expected to deliver a 14.8 per cent CAGR over the next 10 years to reach USD 36 billion by FY31. Ola, with over 165 million customers, is one of the largest consumer internet platforms in the country and adding financial services and insurance to its offerings is a natural extension.