Oyo Hotels and Homes, the parent group of hospitality firm Oyo has filed its first draft papers to raise $1.2 billion (Rs 8,430 crore) by an initial public offering (IPO) on the Indian Stock Exchanges.
As reported by NextBigBrand, first founder Ritesh Agarwal will not be offloading any stake in the IPO. He holds around 34 percent stake in the firm.
The corporation has offered to use the net proceeds from the new issue towards funding prepayment or repayment, in part, of some borrowings availed by several subsidiaries. It will also use the fund for organic and inorganic growth drives besides managing the funds for general corporate objectives.
Besides Agarwal, even Lightspeed Venture Partners, Sequoia Capital, Star Virtue Investment Limited (Didi), Greenoaks Capital, AirBnB, HT Media, and Microsoft are not diluting their shareholding.
The offer for sale comprises aggregate shares from a small portion of SVF India (Softbank), A1 Holdings Inc. (Grab), China Lodging, and Global IVY Ventures LLP.
It consists of 83% of new issue Rs 7,000 crore and 17% offer for sale Rs 1,430 crore.
The IPO is expected to happen in January 2022.
In consultation with lead managers, the business and its stakeholders may consider a moreover issue of equity shares for cash consideration aggregating up to Rs 1,400 million ($193 million). If undertaken, the pre-IPO placement will be at a price to be determined by the company and its stakeholders in consultation with the lead managers. The pre-IPO placement will be undertaken before filing the Red Herring Prospectus with the ROC.
Oyo enters the league of internet companies that have filed for their IPO in the last few months including Paytm, MobiKwik and Nykaa. While online food ordering firm Zomato previously launched a very successful IPO in July.
The development happened soon after Oyo declared a strategic investment from global IT firm Microsoft.
SoftBank plans to sells stake worth over $175 million, Oyo said in the filing. The startup plans to deploy over $330 million to repay its debt. Oyo recently raised $660 million in debt.
Oyo said in the filing that its app has been downloaded more than 100 million times, and 70% of its workforce lives in India. As of December 2019, it declared in the filing; the startup saw its total addressable market opportunity as serving 54 million short-stay storefronts.
“In India, Indonesia and Malaysia, OYO-powered hotel storefronts that joined the platform in 2018 and 2019 performed better than independent hotels of similar sizes in India, Indonesia and Malaysia respectively in 2019 on average. After 12 weeks of entering the OYO platform, OYO-powered hotel storefronts made 1.5 to 1.9 times more revenue on average compared with the average revenue estimated at independent hotels of a related size in India, Indonesia and Malaysia in 2019. In Europe, OYO-powered home storefronts earned an average of 2.4 times more revenue in 2019 compared with the average revenue estimated at an independently managed home in Europe in 2019,” it stated in the filing.
There are no listed firms in India that engage in a business alike to that of Oyo. The weighted average return on net worth is 108.9 percent.