Oyo Eyes $9-Billion Valuation In IPO, Sebi Nod Expected Soon: Report

The company has discussed offering a discount of as much as 15 per cent on the $10 billion suggested by bankers during early discussions, the sources said

Oyo has discussed offering a discount of as much as 15 per cent on the $10 billion suggested by bankers during early discussions, the sources said. Image: Getty

New Delhi: Hospitality major Oyo Hotels is targeting a valuation of $9 billion (Rs 66,700 crore) in its initial public offering (IPO), according to sources who are privy to the development said Bloomberg.

The SoftBank-backed firmis expected to get the green light to proceed with the offering this week or next after filing preliminary documents last year, said the people in the know, adding that Oyo is likely to get Sebi’s nod for its IPO round within the next few weeks.

The $9 billion valuation, which they claim the start-up would target, would be lower than $12 billion as initially reported in the local media and probably lower than the $10-billion level the company hit in 2019.

The start-up has discussed offering a discount of as much as 15 per cent on the $10 billion suggested by bankers during early discussions, the sources said.

The IPO will consist mainly of primary shares, or those sold by the company, and a smaller portion of secondary stock. SoftBank holds about 47 per cent of the equity and aims to sell a small percentage of shares.

Founder Ritesh Agarwal holds 33 per cent stake in the company and he would not be offloading his stake through the IPO. Besides Agarwal, Lightspeed Venture Partners, Sequoia Capital, Star Virtue Investment (Didi), Greenoaks Capital, AirBnB, HT Media, and Microsoft are also not diluting their shareholding.

Oyo’s offer will be among the biggest IPOs since Paytm’s. In its preliminary filing, the company said it planned to raise Rs 8,430 billion ($1.1 billion) through the sale of new shares and some secondary shares, or those held by existing investors.

Bloomberg said that the Covid-19 pandemic brought the start-up’s expansion to a sudden halt. Ritesh Agarwal had to pull back in many markets and laid off thousands of employees. In an interview with Bloomberg TV last year, he said the pandemic hit Oyo like ‘a cyclone’.