Oyo Hotels and Rooms, a SoftBank-backed hospitality unicorn, has decided to join hands with three investment banks named JP Morgan, Kotak Mahindra Capital, and Citi for its initial public offering worth over $1 billion. Moneycontrol, the leading business news portal, reported the above details based on its internal sources.
Oyo Shortlists Three Investment Banks for its Upcoming IPO
The hospitality industry saw a sharp decline in its operations due to the covid pandemic. The global travel industry is showing a promising recovery post-pandemic. Oyo Hotels and Rooms are also expecting a travel surge and the software giant is planning to invest in an Indian startup valuing it at $9 billion.
Riding on the news of travel market recovery and Microsoft’s investment expectations, Oyo has accelerated its IPO preparations. The travel startup has joined hands with JP Morgan, Kotak Mahindra, and Citi banks to work on the issue.
Without revealing the identity, one of the persons who shared the internal news with Moneycontrol, said, “These 3 i-banks have been taken on board recently and work has begun on the issue. The firm is leaning towards a domestic IPO but has kept alternate options open. More i-banks may be added later.”
The second anonymous person talked about the effect of IPO on Oyo and confirmed that it will help Oyo in strengthening the firms’ balance sheet. The person further added, “The plan is to raise more than 1.2 billion dollars, though the size hasn’t been finalized and may vary at a later stage.”
Oyo’s proposed IPO will be a combination of primary shares issue with a secondary component, as reported by the third person. He further said, “The listing will also help to facilitate a partial exit, if required, for some of Oyo’s investors.”
IPO Further Details and Latest Oyo Development
The fourth person who is familiar with current IPO development believes that Oyo has the potential to scale up fast due to its collaboration with many hotels. Oyo’s online advanced tech platform is an added advantage for the startup against its competitors.
Founded by Ritesh Agarwal, Oyo is backed by marquee investors like SoftBank, Sequoia Capital, Lightspeed India, Airbnb, Chinese Didi Chuxing, and ride-hailing firm Grab.
When contacted, there is no response from Oyo, Kotak Mahindra Capital, and Citi. While JP Morgan declined to comment on the current collaboration with Oyo.
Since Oyo’s business was badly affected by the pandemic, it raised $660 million in a debt financing event from global investors last month. This funding will help the startup to retire some of its existing debt and boost its operations.
In July 2021, Oyo Group’s Chief Financial Officer (CFO) Abhishek Gupta also confirmed to Moneycontrol that the startup is preparing itself for the IPO.
In his official statement, Gupta said, “As you know, there’s a lot of nuts and bolts and background work that needs to be done. Our audit committee and board have asked us to be ready for the public market event by the end of this year and after that, it will be a combination of looking at the overall COVID recovery, the market appetite, market readiness as well as our internal readiness. We have not put a time or date.”
Founded in 2013 by Ritesh Agarwal, OYO is a technology-oriented hotels and rooms aggregator platform. It has a collaboration with over 100K+ small hotels and homeowners across 800 cities in 80+ countries, including India, the US, UK, Europe, Southeast Asia, and the Middle East.
In the last quarter of 2020, OYO’s app was the third most downloaded app globally under the travel category with 91+ million installs as per the App Annie report.