SoftBank Group Corp., is a Japanese multinational conglomerate holding company, headquartered in Tokyo, Japan. The company is having a conflict with Bhavish Aggarwal, the Co founder of Ola.
The previous year Bhavish Aggarwal averted a deal proposed by Tiger Global Management. The deal basically involved selling off a part of Ola to SoftBank. Tiger Global owns 16% of Ola while SoftBank is the company’s largest shareholder with a stake of 26 %-27%. Ola even changed its Articles of Association (AOA,) in order to avoid SoftBank from buying its shares, without the approval from the company’s founders and the board. Since then, Tiger Global partner Lee Fixel resigned from the Ola board.
Furthermore, SoftBank is all set to buy up the shares of Ola from Tiger Global. India’s two most powerful start up capitalists, SoftBank and Tiger Global, are considering ways to get around the terms of Ola’s AoA and could come up with a deal on their own.
According to Livemint, Ola denied SoftBank and Tiger Global were exploring such a deal. “Ola’s shareholders are fully committed to the company and are strong backers of Ola’s Founders in their mission. Ola’s shareholders are reputed global institutions and we can unequivocally assert that none of them will do anything which violates their contractual agreements and contravenes Indian laws. Ola is focused on fulfilling its mission of building a global institution every Indian is proud of (and) will not be detracted or drawn into useless speculations,” an Ola spokesperson said in an email. SoftBank declined to comment about it. Tiger Global didn’t respond to an email seeking comment.
According to the Articles of Association (AOA,) SoftBank has the right to appoint one more director “provided that such person is reasonably acceptable to the founders and all other shareholders.” But, SoftBank’s right to appoint a second board member will not apply if the Japanese company ends up owning 50% or more of the preference shares in Ola’s ongoing funding round.
However, if the situation gets even more tense between the cab hailing company owner, Mr. Aggarwal, and the Japanese conglomerate holding company firm, then SoftBank would favour Uber India’s business, leaving Ola behind.