OYO Most Desired Hospitality Company in India Offering Affordable Hotel Rooms, files for Rs 8,430 cr-IPO

Hotel aggregator OYO has filed preliminary documents for a Rs 8,430 crore initial public offering (IPO) as it joined the rush of technology unicorns looking to capitalise on a world-beating rally on stock exchanges.


The Oyo IPO will consist of a fresh issue of shares of up to Rs 7,000 crore and an offer for sale of as much as Rs 1,430 crore, according to the draft red herring prospectus (DRHP) filed with SEBI.

oyo hotels ipo: Oyo Rooms files DRHP for Rs 8,430 crore mega IPO - The Economic Times


The hotel-booking startup, whose official name is Oravel Stays Ltd, in the prospectus said it has made losses in each year since incorporation and the pandemic has further “materially and adversely impacted” its business.

The firm incurred a loss of Rs 2,364.53 crore in FY19, which widened to Rs 13,122.77 crore in the following year but reduced to Rs 3,943.84 crore in FY21.

It had aggregate outstanding borrowings of Rs 4,890.55 crore as of July 31, a part of which will be repaid from proceeds of the issue.

While founder Ritesh Agarwal and his holding company had a combined 33.15 per cent stake, Japanese conglomerate SoftBank owned 46.62 per cent of Oyo and AirBnB Inc another 1.36 per cent.

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Agarwal held 8.21 per cent and his Cayman-registered holding company RA Hospitality Holdings another 24.94 per cent.

As per the DRHP, SoftBank’s arm SVF India Holdings (Cayman) Limited, A1 Holdings Inc, China Lodging Holdings (HK), and Global IVY Ventures LLP are among the entities that are selling some of their shares in the IPO.

Proceeds from the issue would be used towards funding prepayment or repayment, in part, of certain borrowings availed by its subsidiaries amounting to Rs 2,441 crore, and funding the company’s organic and inorganic growth initiatives amounting to Rs 2,900 crore, and balance towards general corporate purpose, it added.

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With the filing for IPO, OYO Hotels and Homes joins the growing list of startups who have filed for initial share sales recently. It follows the spectacular success of Zomato’s IPO that ended with a bumper oversubscription on July 16, and was the biggest since March 2020.

Digital payments startup Paytm and online retailer of beauty products Nykaa are among others that have filed initial documents. Edtech firm Byju’s, the country’s most valuable startup, is also considering an IPO next year.

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Founded in 2013 by college dropout Agarwal, OYO has 5,130 employees around the world, and 70.9 per cent of the total employees are based in India.

“As a result of various initiatives that we took, our adjusted gross profit margin improved from 9.7 per cent in fiscal 2020 to 33.2 per cent in fiscal 2021,” it added.

Global co-ordinators and book running lead managers (GCBRLM) to the offer are Kotak Mahindra Capital Company Limited, JP Morgan India Private Limited and Citigroup Global Markets India Private Limited.

The book running lead managers (BRLMs) to the offer are ICICI Securities Limited, Nomura Financial Advisory and Securities (India) Private Limited, JM Financial Limited and Deutsche Equities India Private Limited, it added.

GCBRLM do both the regulatory and institutional work as well as the marketing of the issue, while the BRLMs are largely engaged in marketing the issue to the investors.

Moody‘s Investors Service Analyst, Corporate Finance, Sweta Patodia said, “OYO’s potential IPO offering will be credit positive as it will strengthen the company’s liquidity and broaden its investor base. It will also provide the company a longer runway to withstand weak operational performance, should pandemic-related disruptions persist for longer than expected.”

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A listing on the stock exchanges will also reduce governance-related risks around corporate transparency and limited public disclosures, she added. It looks as if startups are flourishing after this pandemic lockdown.

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