Oyo files papers for ₹8,430 cr IPO
NEW DELHI: Hotel aggregator Oyo has filed preliminary documents for a ₹8,430 crore initial public offering (IPO) as it joined the rush of technology unicorns looking to capitalize on a worldbeating rally on stock exchanges.
The offering will consist of a fresh issue of shares of up to ₹7,000 crore and an offer for sale of as much as ₹1,430 crore, according to the draft red herring prospectus (DRHP) filed with the Securities and Exchange Board of India (Sebi).
The hotel-booking startup, whose official name is Oravel Stays Ltd, in the prospectus said it has made losses in each year since incorporation and the pandemic has further “materially and adversely impacted” its business.
The firm incurred a loss of ₹2,364.53 crore in FY19, which widened to ₹13,122.77 crore in the following year, but reduced to ₹3,943.84 crore in FY21.
It had aggregate outstanding borrowings of ₹4,890.55 crore as of July 31, a part of which will be repaid from proceeds of the issue.
While founder Ritesh Agarwal and his holding company had a combined 33.15% stake, Japanese conglomerate SoftBank owned 46.62% of Oyo and AirBnB Inc. another 1.36%. Agarwal held 8.21% and his Cayman-registered holding company RA Hospitality Holdings another 24.94%.
As per the DRHP, SoftBank’s arm SVF India Holdings (Cayman) Ltd, A1 Holdings Inc., China Lodging Holdings (HK), and Global IVY Ventures Llp are among the entities that are selling some of their shares in the IPO. Proceeds from the issue would be used towards funding prepayment or repayment, in part, of certain borrowings availed by its subsidiaries amounting to ₹2,441 crore, and funding the company’s organic and inorganic growth initiatives amounting to ₹2,900 crore, and balance towards general corporate purpose, it added.
With the filing for the IPO, OYO Hotels and Homes joins the growing list of startups who have filed for initial share sales recently. It follows the spectacular success of Zomato’s IPO that ended with a bumper oversubscription on July 16, and was the biggest since March 2020.
Digital payments startup Paytm and online retailer of beauty products Nykaa are among others that have filed initial documents. Edtech firm Byju’s, the country’s most valuable startup, is also considering an IPO next year.
Founded in 2013 by college dropout Agarwal, OYO has 5,130 employees around the world, and 70.9% of the total employees are based in India.
“As a result of various initiatives that we took, our adjusted gross profit margin improved from 9.7% in fiscal 2020 to 33.2% in fiscal 2021,” it added.
Global co-ordinators and book running lead managers (GCBRLM) to the offer are Kotak Mahindra Capital Company Limited, JP Morgan India Pvt. Ltd and Citigroup Global Markets India Private Ltd. The book running lead managers (BRLMs) to the offer are ICICI Securities Ltd, Nomura Financial Advisory and Securities (India) Pvt. Ltd, JM Financial Ltd and Deutsche Equities India Pvt. Ltd, it added.
GCBRLM do both the regulatory and institutional work as well as the marketing of the issue, while the BRLMs are largely engaged in marketing the issue to the investors.