Indian Hotel Chain Oyo has filed for its draft papers with market regulator Securities and Exchange Board of India (SEBI) for its IPO. With this IPO, the hospitality startup is planning to raise Rs 8,430 crore ($1.1 billion) initial public offering (IPO).
SoftBank Group-backed Indian hospitality startup Oyo Hotels and Rooms is eyeing to raise around $1 billion. The hotel aggregator is looking to list in India’s financial capital of Mumbai and its IPO is tentatively pegged at between $1 billion and $1.2 billion( ₹8,000 crore), adding it will consist of a fresh issue of shares and an offer for sale from existing shareholders.
As per media reports, Oyo plans to issue new shares worth up to 70 billion rupees while existing shareholders could sell shares worth up to14.3 billion rupees. Some of the start-up’s prominent backers include SoftBank Vision Fund, Lightspeed Venture Partners and Sequoia Capital India. The start-up said it would also consider issuing shares worth up to 14 billion rupees ($193 million) in a pre-IPO placement. The company will use proceeds from the IPO to pay off existing obligations and fund growth, which could include mergers and acquisitions.
Hospitality startup Oyo’s business was severely disrupted by the pandemic. At one point, the startup reported that its business was down by up to 60 per cent as several nations enforced lockdowns as they scrambled to contain the spread of the virus. But it has been showing signs of fast recovery in recent weeks as some of its key markets opened up in recent quarters. The startup said in the filing today that four markets — India, Indonesia, Malaysia, and Europe — account for about 90 per cent of its overall revenue.
Oyo, realising a more profitable business model improved its finances and streamlined its relationship with hotels in recent quarters. The startup today doesn’t own any hotel of its own and instead works with over 157,000 partners and helps them operate hotels, resorts, and homes. It doesn’t promise any minimum guarantees to those partners.
The listing plan follows 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. Ride-hailing firm Ola, which is also backed by SoftBank, is also set to enter markets.
Oyo, in which SoftBank owns a 46 per cent stake and is one of its biggest bets, has endured months of layoffs, cost-cuts and losses during the global health crisis. Ritesh Agarwal had said in July that business was likely to return to levels seen before the second wave of COVID-19 infections in India and “grow from there".
Last month, Oyo received a $5 million investment from Microsoft Corp. Kotak Mahindra Capital, JP Morgan and Citi are the bankers advising Oyo on the IPO, the source said.
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