Oyo IPO No More? Company May Look To Raise Private Funding Instead Of Public Debut

Oyo Hotels & Homes, which initially filed a draft application for an IPO of over $1 billion (₹8,309 crore) in October 2021, is reportedly in the process of finalising plans to withdraw the papers from the Securities and Exchange Board of India (SEBI).

What Happened: The decision effectively puts a pause on the hospitality startup's intentions to go public, the Economic Times reported, citing sources. The sources mentioned that discussions about the withdrawal have been ongoing for some time and are nearing completion.

Key stakeholders have reportedly been informed, and Oyo has begun conversations with private market investors to raise new capital over the next six to eight months.

Oyo’s first public offer filing was returned by the markets regulator in January 2023, prompting the SoftBank-backed firm to refile its draft red herring prospectus (DRHP) with updates and revisions.

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Following this, Oyo made a confidential pre-filing with SEBI for a considerably smaller IPO size. The startup was reportedly directed to refile applications with a smaller secondary share sale portion than initially planned, a significant reduction, according to insiders.

SoftBank holds a 46% stake in Oyo, with CEO Ritesh Agarwal owning 33%. Other investors include Lightspeed and Peak XV Partners. Oyo has around $200 million-$250 million (₹1,661 crore-₹2,080 crore) in cash reserves and significantly reduced its operating burn, sources told the business daily.

The comapny is expected to enhance operating profitability further after reporting a net profit of ₹30 crore during the third quarter of FY24.

Regarding funding, Oyo engaged with Malaysian sovereign wealth fund Khazanah Nasional Berhad to raise $400 million (₹3,323 crore) at a valuation of $6 billion (₹49,855 crore), as reported by Bloomberg on January 25. Talks with other investors are reportedly in early stages.

Oyo’s reconsideration of its IPO plans coincides with similar decisions by several new-age companies gearing up for public listings, including FirstCry, Ola Electric, Swiggy, OfBusiness and Lenskart.

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