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OYO files IPO draft papers to raise $1.16 billion

Hospitality startup OYO Hotels & Homes filed draft papers with market regulator Securities and Exchange Board of India (SEBI) for its initial public offering (IPO) to raise $1.16 billion (~Rs 8,430 crore). The initial share sale includes a Rs 7,000 crore fresh issue of equity shares and a Rs 1,430 crore offer for sale (OFS).

Oyo logo with Oravel Stays Limited text on bottom

Logo: Oravel Stays Limited (Illustration: TechStory)

OYO’s initial public offering comprises equity shares of Oravel Stays Limited with a face value of Re 1 apiece, with a total value of Rs 8,430 crore (~$1.16 billion). The IPO will be structured of 83 percent new issues and 17 percent offer for sale.

SoftBank Group owns almost 46 percent of the company, while OYO founder Ritesh Agarwal, who owns roughly 33 percent of the company, will continue to be promoters following the initial public offering. Although Agarwal will not sell any of his shares, as reported last week, however, SoftBank will liquidate a portion of its stake in the company through the OFS channel. In an offer for sale, existing investors can sell their stake in any fraction or entirely.

SoftBank Group will offload stakes worth Rs. 1,328.53 crore, will release shares worth Rs. 51.6 crore. Huazhu Hotels, which made an investment in 2017, will reportedly be selling its stakes in OYO for around Rs. 23.13 crore. Sunil Munjal’s family firm, the Hero Group, will liquidate a portion of its stake worth Rs. 26.71 crore.

The startup also stated that it would consider offering shares worth up to $193 million (Rs 1400 crore) in a pre-IPO placement. The funds from the IPO will be used to pay off existing debts and fund future growth, which might include acquisitions and mergers. If any pre-IPO placement is conducted, the price will be determined by the company and its stakeholders in discussion with the lead managers, and the Pre-IPO placement will take place before filing of the Red Herring Prospectus with the Registrar of Companies (RoC).

The offer’s global co-ordinators and book running lead managers as earlier reported include JP Morgan India Private Limited, Kotak Mahindra Capital Company Limited, and Citigroup Global Markets India Private Limited. Whereas Nomura Financial Advisory and Securities (India) Private Limited, ICICI Securities Limited, JM Financial Limited, and Deutsche Equities India Private Limited are the Book Running Lead Managers for the offering.

OYO, founded in 2013 by Ritesh Agarwal, has last secured $5 million from Microsoft, valuing the company at $9 billion. In July, the company raised $660 million in term loan funding from international institutional investors.

The hospitality unicorn counts Masayoshi Son’s SoftBank, NASDAQ-listed Airbnb, Microsoft, Lightspeed Venture Partners, Innoven Capital, among others as ts investors. So far, the company has raised $4.1 billion from 26 investors through 19 rounds.

OYO will become the fourth Indian startup to go public in the Indian travel and tourism sector. Le Travenue, the parent company of online ticket booking platform ixigo, filed its DRHP in August and is planning to raise Rs 1,600 crore through its IPO.

Source: OYO’s DHRP

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