Oyo To Launch IPO After September, May Settle For Lower Valuation: Report

Oyo had filed preliminary papers with the Sebi to raise Rs 8,430 crore through an initial share sale in October last year. However, it is now preparing to settle for a lower valuation of $7-8 billion

New Delhi: Oyo, the hospitality and travel-tech company, is planning to launch its initial public offer (IPO) after September 2022, according to a report by the PTI.

Oyo has also written to market regulator Securities and Exchange Board of India (Sebi) seeking to file updated and restated consolidated financial information for the IPO.

Oyo had filed preliminary papers with the Sebi to raise Rs 8,430 crore through an initial share sale in October

last year. However, the company is now preparing to settle for a lower valuation of $7-8 billion against the $11 billion it was targeting initially, quoting sources, the PTI said.

According to the sources, Oyo’s move to launch the IPO after the September quarter is mainly driven by the expectation of improvement in its financial performance and the current volatile nature of the market.

Oravel Stays Ltd, which runs Oyo, in its letter to the Sebi has sought permission to include restated financial statements for the six-month periods ended September 30, 2022, September 30, 2021, and September 30, 2020.

"Price swings in a newly listed stock create concern among the public. Amongst such sentiments, it will be best to be able to first show to the investors that the business revival is real, it is strong and is leading to much higher bookings and perhaps, the first sign of a positive bottom line. Hence, Oyo will likely wait for a quarter," said the source aware of the development.

When reached out for comments, Oyo didn’t respond to PTI questions.

The company's draft red herring prospectus (DRHP) stated Oyo had incurred a loss of Rs 1,744.7 crore in 2020-21.

The company's proposed IPO comprised a fresh issue of equity shares aggregating up to Rs 7,000 crore and an offer for sale to the tune of Rs 1,430 crore, DRHP said.

However, Oyo now wants to go ahead only with the Rs 7,000 crore primary issue, doing away with the Rs 1,430 crore OFS component, and has reached out to the Sebi for approval. An OFS allows promoters of a company to sell their shares to the public through the stock exchange.

Oyo's OFS would have seen its largest investor Softbank Group selling around 2 per cent of its stake and other investors Grab Holdings, Huazhu Hotels, and the family office of Sunil Munjal of the Hero Group diluting their stakes as well.

In August 2021, when Oyo raised $5 million from Microsoft, it was valued at $9.6 billion.