Ather Energy shrinks IPO size ahead of listing

BENGALURU: Electric two-wheeler maker Ather Energy has trimmed its IPO size in the final stretch before listing, signaling a calibrated approach to capital raising amid muted market sentiment for new-age hardware startups.

In its red herring prospectus (RHP) filed with Securities and Exchange Board of India (Sebi) on Tuesday, Ather has slashed the primary component of the offer to Rs 2,626 crore, a 15% reduction from the Rs 3,100 crore it had proposed in the draft RHP (DRHP) filed in September 2024.

The IPO will open for subscription on April 28 and close on April 30, with anchor bidding scheduled for April 25. Ather’s equity shares are proposed to be listed on both BSE and NSE, with NSE designated as the lead exchange.

The secondary sale component – an offer for sale (OFS) by existing shareholders – has been halved. The company now plans to offer up to 1.1 crore equity shares through the OFS route, down from 2.2 crore equity shares earlier. Investors scaling back their OFS include backers Caladium Investment, NIIF II, and Internet Fund III, as well as IIT Madras’ incubation bodies. Founders Tarun Mehta and Swapnil Jain have marginally reduced their respective OFS contributions to 9.8 lakh shares each from 10 lakh earlier.

Hero MotoCorp, which holds the largest stake in Ather and is also listed as a promoter, continues to retain its full holding and is not participating in the OFS. The final offer does not include a pre-IPO placement.

According to the RHP, proceeds from the fresh issue will be used primarily for R&D initiatives (Rs 400 crore), expansion of manufacturing facilities (Rs 585 crore), establishment of new retail outlets and experience centres (Rs 530 crore), and repayment or prepayment of certain borrowings (Rs 800 crore). The company has earmarked Rs 228 crore for general corporate purposes.

Ather’s revised IPO plan comes at a time when Indian equity markets have shown mixed appetite for tech-first or capital-intensive ventures. The downscaling mirrors moves by other issuers to align with prevailing investor expectations on profitability and capital efficiency.

Founded in 2013 and incubated out of IIT Madras, Ather manufactures premium electric scooters and operates its own fast-charging network – Ather Grid – across more than 140 cities. As of the financial year 2023-24, it reported consolidated revenue of Rs 1,806 crore, but remained loss-making, with net losses of Rs 864 crore.

With this IPO, Ather is seeking to bolster its balance sheet as it competes in a crowded electric mobility market and scales manufacturing capacity to serve both urban and tier II markets.