Ather Energy, the electric two-wheeler manufacturer, is gearing up for a significant milestone as it prepares for its highly-anticipated Initial Public Offering (IPO). As part of its strategic move towards going public, the company has converted its outstanding compulsory convertible preference shares (CCPS) into equity shares, marking a crucial step in the IPO process.
CCPS Conversion: A Critical Step Towards IPO
On March 8, 2025, Ather Energy’s board passed a resolution to convert 1.73 lakh outstanding CCPS into 24 crore fully paid-up equity shares. The conversion of these shares is part of the company’s larger IPO strategy, allowing it to comply with the regulatory requirements set by the Securities and Exchange Board of India (SEBI). According to SEBI regulations, all CCPS must be converted into equity shares before a company files its Red Herring Prospectus (RHP) for an IPO.
The newly converted equity shares have a face value of INR 1 each and will rank pari-passu, meaning they will carry the same rights as the company’s existing equity shares. This conversion not only ensures that Ather Energy complies with SEBI’s stipulations but also gives the company a streamlined equity structure, which is essential for potential investors looking to assess the company’s value before its public offering.
What Are Compulsory Convertible Preference Shares (CCPS)?
CCPS are a form of preferential equity where investors hold preference in terms of dividend payout or liquidation. However, these preference shares are compulsory, meaning that they must be converted into common equity after a specific time or event, in this case, before the IPO. By converting these preference shares into equity, Ather Energy is effectively aligning all of its shareholders under a common equity structure, simplifying its ownership model ahead of listing on the stock market.
Why the Conversion Matters
For any company preparing for an IPO, the conversion of CCPS into equity shares is a critical step in ensuring that all outstanding shares are in the form of common equity. This is necessary because, in an IPO, only common equity shares are offered to the public, and preference shares cannot be listed or traded on the stock exchange. This conversion also reduces any complications that might arise from having multiple classes of shares with different rights and privileges.
Furthermore, the conversion of the CCPS ensures transparency and consistency in the company’s financial structure, making it easier for investors to understand the company’s valuation and growth potential. Ather Energy’s IPO is expected to attract significant attention, especially given the growing demand for electric vehicles in India and the company’s position as a leader in the electric two-wheeler market.
Ather Energy’s Growth and IPO Prospects
Ather Energy has been at the forefront of India’s electric two-wheeler revolution. The company, known for its innovative products like the Ather 450X, has made substantial strides in expanding its market presence. With the government’s push towards electric vehicles and growing consumer interest, Ather Energy’s IPO comes at a promising time, as it is well-positioned to capitalize on the shift towards sustainable mobility solutions.
The conversion of CCPS into equity shares, combined with other preparatory steps, signals the company’s readiness to go public and marks an important milestone in its growth journey. With the IPO approaching, Ather Energy is poised to unlock new avenues for expansion, attract institutional investors, and ultimately fuel the next phase of its success in the electric vehicle sector.
Conclusion
The conversion of compulsory convertible preference shares into equity shares is a strategic move that not only aligns Ather Energy’s capital structure with the requirements of an IPO but also reinforces its readiness to tap into the capital markets. As the company inches closer to its IPO launch, stakeholders and investors alike will be closely watching Ather Energy’s next steps, as the company seeks to redefine the electric two-wheeler space in India.
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