Hospitality giant Oyo has filed its draft red herring prospectus or DRHP with SEBI along with details of its much-awaited Initial Public Offering (IPO). The SoftBank-backed company is slated to raise Rs 8,430 crore in the upcoming public offer constituting a fresh issue of Rs 7,000 crore and an offer for sale (OFS) of Rs 1,430 crore.
SoftBank Vision Fund will be the biggest beneficiary of the OFS, offloading shares worth Rs 1,328.5 crore while Global Ivy Ventures and China Lodging Holdings will be selling stakes worth Rs 23.13 crore and Rs 51.62 crore respectively. As per DRHP, Oyo might raise Rs 1,400 crore via private placement in a pre-IPO round before the listing which will lead to a reduction in the size of its IPO to Rs 7,030 crore.
Importantly, its founder and CEO Ritesh Agarwal; will not be selling any of his holdings in the upcoming IPO as part of the OFS. Currently, Agarwal is the second-largest shareholder in the company, controlling around 33.15% stake in Oravel Stays Limited which is the holding entity for Oyo and its operations worldwide. Please refer to the pie chart below for the pre-offer shareholding.
The DRHP further states that out of the Rs 7,000 crore to be raised in the fresh issue the company is planning to use Rs 2,441 crore for repayment of debt. Oyo had raised nearly Rs 4,920 crore in debt from global institutional investors in July this year to bolster its operations, which have been hit hard by the Covid-19 pandemic.
The company plans to use another Rs 2,900 crore or 41.4% of the fresh issue proceeds to fund organic and inorganic growth initiatives and the rest for general corporate purposes.
While the company did not divulge any details regarding the price band or valuation at which it plans to raise the upcoming issue, media reports suggest that Oyo is looking for a valuation of around $12 billion. The company was last valued at nearly $9.6 billion when it raised funds from Microsoft last month.
Oyo has listed Kotak Mahindra Capital, J.P. Morgan, Citi Group, ICICI Securities, Nomura Financial Advisory, JM Financial Limited and Deutsche Equities as the lead managers for the upcoming IPO in the DRHP.
Like all hospitality chains, Oyo was hit hard by the lockdowns and travel restrictions caused by the COVID 19 pandemic. However, the company claims to have seen a resurgence in the scale of its operations starting from the third quarter of 2021. Oyo currently has a presence in over 35 countries worldwide with more than 157,000 hotels listed on its platform as per its own website.
In the past couple of months, around 10 internet companies have filed their DRHP ahead of public listing. While Zomato, CarTrade and Freshworks have already had successful listings, Paytm, Mobikwik, PolicyBazaar, Nykaa, ixigo and Tracxn are in the pipeline to hit the bourses.
It’s worth noting that Freshworks became the first Indian-origin SaaS company to list on a US stock exchange, NASDAQ in this case.
