Indian electric scooter maker Ather Energy plans to raise around $530 million in its initial public offering as the startup seeks to capitalize on growing demand for electric vehicles in the world's third-largest auto market. .

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

The startup said the proceeds will be used to fund a new manufacturing facility in Maharashtra, repay borrowings, and for research and development. Ather's IPO plans come as India's electric vehicle market heats 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 sovereign wealth fund National Investment and Infrastructure Fund, Ather Energy held about 19% of the electric two-wheeler market at the end of August, according to government data.

The startup faces stiff competition from well-funded startups and established automakers that are vying to capture a slice of India's fast-growing electric two-wheeler market. Ola Electric leads the market with a 31% share, while TVS Motor and Bajaj Auto account for 20% and 19% respectively. Hero has about 5% market share.

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. 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 ended March, according to Tracxn. Axis Capital, HSBC, JM Financial and Nomura are the main bookrunners for Ather's IPO.