OYO IPO: Hospitality firm plans IPO after September, may settle for lower valuation

OYO IPO: OYO is looking to launch its initial public offer after September. The hospitality and travel-tech firm has written to stock market regulator Sebi, seeking to file updated and restated consolidated financial information, as per PTI reported.

According to people in the know of the development, the company is now prepared to settle for a lower valuation of around USD 7-8 billion against the USD 11 billion it was targeting initially. It had filed preliminary papers with Sebi to raise Rs 8,430 crore through an initial share sale in October last year, said PTI.

They said OYO's move to launch the IPO after the September quarter is mainly driven by the expectation of improvement in its financial performance and the current volatile nature of the market.

According to PTI, Oravel Stays Ltd, which owns OYO, asked Sebi for approval to incorporate restated financial results for the six-month periods ending September 30, 2022, September 30, 2021, and September 30, 2020, in a letter.

"Price swings in a newly listed stock create concern among the public. Amongst such sentiments, it will be best to be able to first show to the investors that the business revival is real, it is strong and is leading to much higher bookings and perhaps, the first sign of a positive bottom line. Hence, OYO will likely wait for a quarter," said a person aware of the company's plans.

The company declined to comment, said PTI.

OYO lost Rs 1,744.7 crore in FY21, according to the company's DRHP (draft red herring prospectus).

As per the DRHP, the company's proposed IPO included a fresh issue of equity shares worth up to Rs 7,000 crore and a Rs 1,430 crore offer for sale, PTI said.

However, it has been claimed that OYO has approached Sebi for clearance to proceed with only the Rs 7,000 crore primary issue, excluding the Rs 1,430 crore offer for sale (OFS) component. An OFS permits a company's promoters to sell their shares to the general public on a stock market.

Softbank Group, OYO's largest investor, would have sold about 2% of its interest, and other investors Grab Holdings, Huazhu Hotels, and Sunil Munjal's Hero Group diluting their stakes as well, said PTI.

In addition, given how the stock markets have altered in recent months, OYO will settle for a more reasonable valuation of roughly USD 7-8 billion when it goes public, down from the USD 11 billion it was targeting previously.

According to PTI, the markets were buoyant when the company filed its DRHP with Sebi in October 2021, and IPOs were receiving high valuations and oversubscriptions, with both global and domestic capital flooding the stock market.

However, the scenario has altered since then, with geopolitical unrest, rising inflation, and interest rate hike cycle, said PTI.

When OYO raised USD 5 million from Microsoft in August 2021, it was valued at USD 9.6 billion.