App sale

Oyo Investors Not Diluting Shares Could Cut IPO Size

Bombay : Oravel Stays Pvt. Ltd, which operates hotel unicorn Oyo Hotels and Homes, plans to reduce the size of its initial public offering after its investors abandoned plans to sell their holdings through a public offering, two people with knowledge of the company said. development.

In its draft stock sale documents in October, Oyo had proposed a 8,340 crore IPO, which included an offer to sell (OFS) of 1,340 crore from shareholders SoftBank Group, Grab Holdings Inc., HuaZhu Hotels and the family office of Hero Group’s Sunil Munjal.

SoftBank Group, which owns 46% of Oyo, originally planned to sell about 2% of the company in the IPO. Southeast Asian taxi app Grab, which invested $100 million in Oyo in 2018, offered to sell around 51.6 crore shares. HuaZhu Hotels or China Lodging Holdings, which invested in 2017, offered to sell 23.13 crore, as Sunil Munjal’s family office planned to sell shares worth 26.71 crores.

The SFO was scrapped and the company will raise a lower amount at a lower valuation, the people said on condition of anonymity. The company has now cut its valuation forecast to around $7 billion to $8 billion, said one of two people familiar with the company’s strategy. These changes will be reflected in its updated IPO documents, the person added. Oyo has not yet received market regulator approval for the issuance.

“Even so much (the assessment) is generous,” said the other person mentioned above.

Many companies have put their IPO plans on hold due to the turbulent markets caused by the Russian-Ukrainian war. Indian stocks, especially newly listed internet companies, have posted significant losses in recent weeks, undermining investor sentiment after a 2021 blockbuster for IPOs.

Spokespersons for Oyo and its investors did not respond to requests for comment on Tuesday.

On March 17, Bloomberg News reported that Oyo had cut its IPO by about $1 billion by 50% and halved its valuation from its previous expectation of $12 billion. The report also indicates that the company may suspend its offer. Reacting to the story, Oyo issued a statement “strongly denying the claim that we are suspending the IPO or drastically changing valuations.”

In the statement, Oyo said it “has strong cash balances and our business performance has improved significantly since filing our prospectus.”

“While we cannot disclose specific financial data here which will be shared in our upcoming public filings, aided by a resurgence in travel and tourism, we have seen strong revenue growth and our EBITDA losses in the first half of fiscal 22 were 66% lower than we experienced in the same period last year, and we are on a clear path to profitability,” the company said.

In the draft documents, Oyo said it plans to use proceeds from the IPO of approximately 2,441 crores to repay debt from its units including Oravel Stays Singapore Pte Ltd, Oravel Hotels LLC and Oyo Hospitality Netherlands BV, Oyo Singapore and OHL.

The second person mentioned above said that Oyo’s consumption rate is around $4-5 million per month.

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