Oyo IPO coming soon, SoftBank-led startup eyes over ₹8,000 crore

SoftBank Group and Airbnb Inc-backed Indian hospitality startup Oyo Hotels and Rooms has filed draft papers with market regulator Securities and Exchange Board of India (Sebi) for its Initial Public Offering (IPO). The hotel-booking startup is looking to raise ₹8,430 crore ($ 1.1 billion) through its initial public offering (IPO).

According to media reports, Oyo plans to issue new shares worth up to ₹7,000 crore while existing shareholders could sell shares worth up to ₹1,430 crore. Oyo’s prominent backers include SoftBank Vision Fund, Lightspeed Venture Partners and Sequoia Capital India. Oyo said it would also consider issuing shares worth up to ₹1,400 crore in a pre-IPO placement. Reports suggest the company will use the proceeds from the IPO to pay off existing obligations and fund growth, which could also include mergers and acquisitions.

Founder Ritesh Agarwal, his holding company RA Hospital Holdings and SoftBank Vision Fund – the three largest shareholders – are the promoters, according to the prospectus.

Oyo, which is said to have seen its business down by as much as 60 per cent due to the lockdowns imposed as a result of the pandemic, has reportedly seen fast-paced recovery in recent weeks. Agarwal had said in July that business was likely to return to levels seen before the second wave of the pandemic in India and “grow from there”. The recent recovery is being attributed to easing of pandemic restrictions in key Oyo markets such as India, Indonesia, Malaysia and Europe. The four countries, the Gurgaon-based startup said in its filing today, account for close to 90 per cent of its overall revenue.

Oyo’s listing plan comes against the backdrop of a stellar debut by food delivery firm Zomato Ltd in July. Berkshire Hathaway Inc-backed Paytm and private equity firm TPG-backed Nykaa have also filed for IPO. Ola, which again is backed by SoftBank, is also set to enter the market.

According to the filing, the Oyo app has been downloaded 10 crore times, making it one of the most-popular travel apps in the world along with Airbnb and Booking.com. 

The startup doesn’t own any hotel of its own and rather works with over 1.57 lakh partners and helps them operate hotels, resorts, and homes. The startup was last valued at about $9 billion, according to CB Insights, making it India’s third most valuable startup. The company is expected to list on the Indian exchanges by early next year.