Hospitality startup Oyo likely to file for $1.2 billion IPO next week

Of the total issue, up to $250 million could be in secondary share sales and early-stage investors of Oyo are likely to make a partial exit through this IPO

Oyo grappled with an existential crisis during the COVID-19 pandemic. It laid off staff and instituted salary cuts to stay afloat | Photo: Twitter

Oyo Hotels and Homes is expected to file an IPO next week, Reuters news agency reported. After the stellar debut of food aggregator Zomato, the hospitality startup OYO is likely to go public and is eyeing between $1 billion and $1.2 billion, which is approximately between 7,3008,800 crore. 

According to reports, this will consist of a fresh issue of shares and an offer for sale from existing shareholders. After Zomato, CarTrade, Paytm, PolicyBazaar, Nykaa, and Mobikwik, Oyo would be the seventh Indian tech unicorn to roll out an IPO. While Zomato and CarTrade have already rolled out their IPOs, the others have filed papers with SEBI.

Oyo grappled with an existential crisis during the COVID-19 pandemic. It laid off staff and instituted salary cuts to stay afloat. The SoftBank-backed startup has appointed bankers and lead book managers for its listing, and is expected to file its draft red herring prospectus (DRHP) by mid-October.

The company has appointed Kotak Mahindra Capital, Citigroup, ICICI Securities, Nomura and Bank of America as lead book managers for the public issue, the business daily Mint said. Of the total issue, up to $250 million could be in secondary share sales and early-stage investors of Oyo are likely to make a partial exit through this IPO.

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OYO recently raised about $5 million in a strategic investment from Microsoft. 

The company was recently valued at $9.6 billion and had about $780 million to $800 million in the bank as of three months ago and raised $660 million in debt in July. It reported debt funding worth $660 million from global institutional investors, including Fidelity Investments. According to the company, the proposed issuance was subscribed 1.7 times as it received commitments of close to $1 billion from leading institutional investors. Based on the response, the debt deal was upsized and increased by 10 per cent to $660 million, the company said in a statement.

Ritesh Agarwal, who has over 30 per cent stake in the company, is unlikely to offload any stake, media publications reported.

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