As the start-up seeks to capitalise on the growing demand for electric vehicles in the world's third-largest auto market, Indian electric scooter manufacturer Ather Energy plans to raise around $530 million in its initial public offering.

The Bengaluru-based startup, which competes with recently listed rival Ola Electric, is reportedly targeting a valuation between $1.5 billion and $2 billion. The company said it will sell up to $370 million of new shares in the IPO and up to 22 million shares from existing investors.

The startup said the proceeds will be used to fund a new manufacturing facility in Maharashtra, repay debt and for research and development. Ather's IPO comes at a time when the electric vehicle market in India is heating up due to government incentives and rising fuel prices. The country aims to make 30% of private cars and 70% of commercial vehicles electric by 2030.

Backed by India's Hero MotoCorp and the sovereign wealth fund National Investment and Infrastructure Fund, Ather Energy held nearly 19% of the electric two-wheeler market at the end of August, according to government data.

The startup faces stiff competition from well-funded start-ups and established automakers that are rushing to capture a slice of India's fast-growing electric two-wheeler market. Ola Electric leads the market with 31% share, followed by TVS Motor and Bajaj Auto with 20% and 19%, respectively. It has a market share of around 5%.

Founded in 2013 by Tarun Mehta and Swapnil Jain, Ather is known for its in-house design approach - 80% of its core components are designed in-house. According to Tracxn, the company raised about $500 million in several rounds and reported a loss of $126 million on revenue of $213 million in the fiscal year that ended in March. Axis Capital, HSBC, JM Financial and Nomura are the bookrunners for the IPO.