OYO intends to go public after September, but may accept a lower valuation

OYO’s decision to hold the IPO after the September quarter is primarily motivated by the anticipation of improved financial performance and the market’s present volatility.

OYO, a hospitality and travel-tech company, has written to stock market regulator Sebi, requesting updated and restated consolidated financial information in order to undertake its initial public offering after September.

According to persons familiar with the situation, the company. Which filed preliminary paperwork with Sebi in October last year to raise Rs 8,430 crore through an initial share offering. And is reportedly willing to accept a lesser valuation of USD 7-8 billion. Rather than the USD 11 billion it had hoped for.

According to them, OYO’s decision to launch the IPO after the September quarter is primarily motivated by the expectation of improved financial performance and the market’s current volatility.

Oravel Stays Ltd, which owns OYO, is thought to have asked Sebi for approval to incorporate restated financial results for the six-month periods ending September 30, 2022, September 30, 2021, and September 30, 2020 in a letter.

“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 a person aware of the company’s plans.

OYO declined to comment when contacted for comment.

According to the DRHP, the company’s proposed IPO included a fresh issue of equity shares. Worth up to 7,000 crore and a 1,430 crore offer for sale.

OYO IPO

However, it has been claimed that OYO has approached Sebi for clearance to proceed with only the 7,000 crore primary issue, excluding the 1,430 crore offer for sale (OFS) component. An OFS permits a company’s promoters to sell their shares to the general public on a stock market.

Softbank Group, OYO’s largest investor, would have sold about 2% of its interest, with other investors Grab Holdings, Huazhu Hotels, and Sunil Munjal’s Hero Group family office decreasing their stakes as well.

In addition, given how the stock markets have altered in recent months, OYO will settle for a more fair valuation of roughly USD 7-8 billion when it goes public, down from the USD 11 billion it was eyeing previously.

The markets were booming when the company filed its DRHP with Sebi in October 2021. And IPOs were receiving high valuations and oversubscriptions. With both global and domestic capital flooding the stock market.

With global upheaval, rising inflation, and an interest rate hike cycle, the environment has changed since then.
When OYO raised USD 5 million from Microsoft in August 2021, it was valued at USD 9.6 billion.

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