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OYO files draft papers for $1.2 billion public offering October 04 2021OYO IPO, upcoming IPO, latest IPO, OYO files draft

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OYO files draft papers for $1.2 billion public offering

Oyo Hotels and Homes, the parent company of the hospitality provider Oyo, has filed draft documents for an initial public offering (IPO) on the Indian stock exchanges to raise $1.2 billion (Rs 8,430 crore).

Ritesh Agarwal, the company's first founder, will not sell any shares in the IPO. He holds around a third of Oyo's stock.

The company intends to use the net proceeds from the new offering to cover the prepayment or partial repayment of the borrowings taken out by certain subsidiaries. In addition to using the funds for regular corporate objectives, it will use the fund for organic and inorganic growth activities.

Lightspeed Venture Partners, Sequoia Capital, Star Virtue Investment (Didi), Greenoaks Capital, AirBnB, HT Media, and Microsoft, in addition with Agarwal, are not diluting their stakes.

A tiny portion of SVF India (Softbank), A1 Holdings Inc. (Grab), China Lodging, and Global IVY Ventures LLP are included in the offer for sale.

The initial public offering is expected to take place in January 2022. It is made up of 83% new issue of Rs 7,000 crore and 17% offer for sale (OFS) worth Rs 1,430 crore.

In collaboration with key managers, the company and its stakeholders may contemplate issuing additional equity shares for a cash price of up to Rs 1,400 million ($193 million).

If a pre-IPO placement is made, it will be at a price determined by the firm and its stakeholders in collaboration with the lead managers, and it will be made before the Red Herring Prospectus is filed with the Registrat of Companies (RoC).

Paytm, MobiKwik, and Nykaa are among the internet startups that have filed for an initial public offering in the recent few months. Online food ordering service Zomato, on the other hand, had a highly successful initial public offering (IPO) in July.

The news comes just after Oyo revealed a strategic investment from Microsoft, a worldwide IT giant

The company, which was recently valued at $9 billion, is aiming for a $12-14 billion valuation through this IPO.

Kotak Mahindra Capital Company, J.P. Morgan India, and Citigroup Global Markets India are the global co-ordinators and book running lead managers for the offer.

ICICI Securities, Nomura Financial Advisory and Securities (India), JM Financial, and Deutsche Equities India are the book running lead managers for the offering.

After recovering from the COVID-19 pandemic, Oyo switched to a revenue-share strategy, as opposed to the previous one, which paid its hotel partners a minimum guarantee.

Oyo is focusing on technologies to offer smart room experiences for travellers, such as tailored in-room experiences, as a result of its partnership with Microsoft.

The company has also introduced a self-registration tool that allows hotels to join the platform in under 30 minutes. The move is expected to increase the number of hotels on the platform, which has decreased dramatically since the outbreak.

The pandemic has resulted in significant changes in consumer behavior when it comes to booking travel, such as a preference for platforms that allow for social distancing, local travel, flexibility, quicker booking, and better customer experiences. As a result of these developments, the way small and medium hotel businesses function has accelerated, resulting in increased technology use, which will continue to define the future of hospitality.

To meet this demand, the corporation has placed a strong emphasis on technology, to the point where its IT team's salary was increased during the peak of the pandemic.

The company had given its technical team raises and promotions, as well as full variable pay, for the period of July 2019 to June 2020.

It has announced plans to hire approximately 300 technical experts, ranging from entry-level to senior leadership positions, in areas such as software development, engineering, product managers, designers, and data scientists in August.

Even when all of this is going on, Oyo is still dealing with a number of legal difficulties.

 longtime rival Zo Rooms, which has been battling Oyo in court for at least three years, has filed an appeal in the Delhi High Court (HC) demanding protection of its rights against the firm. On October 7, the court is likely to consider this appeal.

Oyo was also involved in an insolvency proceeding earlier this year, after the acceptance by NCLT in March of a petition filed by a Gurgaon-based hotelier.

In accordance with the insolvency code, it also named advocate Keyur Jagdishbhai Shah as the interim resolution professional (IRP) and asked other creditors of the company to submit their claims as well.

Multiple hotels filed claims against the corporation, with the total claimed sum estimated to be over Rs 160 crore, according to reports.

It took four months for Oyo to obtain any relief when the NCLAT, the higher court, ruled in Oyo's favor, preventing the hoteliers from intervening.

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