Ritesh Agarwal-led OYO Rooms files preliminary papers For Rs 8,430 Cr-IPO

Hotel aggregator OYO Rooms has filed preliminary documents for an initial public offering (IPO) of Rs 8,430 crore as it joins the crowd of technology unicorns to capitalize on the world-beating rally on stock exchanges.

According to the draft red herring prospectus (DRHP) filed with Sebi, the Oyo IPO will include a fresh issue of shares up to Rs 7,000 crore and an offer for sale of up to Rs 1,430 crore.

The hotel-booking startup, whose official name is Oravel Stays Ltd, has said in the prospectus that it has incurred losses every year since incorporation, and the pandemic has “materially and adversely affected” its business.

The firm reported a loss of Rs 2,364.53 crore in FY19, which increased to Rs 13,122.77 crore the following year but declined to Rs 3,943.84 crore in FY21.

As of July 31, it had a total outstanding of Rs 4,890.55 crore, a part of which would be paid from the proceeds of the issue.

While founder Ritesh Agarwal and his holding company held a combined 33.15 percent stake, Japanese conglomerate SoftBank held 46.62 percent and Airbnb Inc held another 1.36 percent.

Agarwal held 8.21 percent and a 24.94 percent stake in the Cayman-registered holding company RA Hospitality Holdings.

According to DRHP, SoftBank’s arm SVF India Holdings (Cayman) Ltd., A1 Holdings Inc., China Lodging Holdings (HK), and Global IVY Ventures LLP are among the entities that are selling some of their shares in the IPO.

The proceeds from the issue will be used partly for prepayment or repayment of certain borrowings taken by subsidiaries of Rs 2,441 crore, and Rs 2,900 crore for organic and inorganic growth initiatives of the company, and the rest for general To be used for corporate purposes. , added it.

With the filing for IPO, OYO Hotels & Homes join a growing list of startups that have applied for initial share sale recently. It follows the resounding success of Zomato’s IPO which ended with a bumper oversubscription on July 16 and was the biggest since March 2020.

Digital payments startup Paytm and online retailer of beauty products Nykaa are among others who have filed preliminary documents. The country’s most valuable startup ed-tech firm Byju’s is also looking to launch an IPO next year.

Founded in 2013 by college dropout Agarwal, OYO has 5,130 employees worldwide, and 70.9 percent of the total workforce is based in India.

“As a result of the various initiatives we took, our adjusted gross profit margin increased from 9.7 percent in FY20 to 33.2 percent in FY21.”

The Global Coordinators and Book Running Lead Managers (GCBRLM) for this offer are Kotak Mahindra Capital Company Limited, JP Morgan India Private Limited, and Citigroup Global Markets India Private Limited.

OYO seeks Sebi nod for Rs 8,430-crore IPO #OyoIPO #OYO #OravelStays #RiteshAgarwal #SoftBank #RAHospitalityHoldings https://t.co/beIePQ2IAS

— ETRealty (@Realty_Et) October 1, 2021

The Book Running Lead Managers (BRLMs) of the Offer are ICICI Securities Limited, Nomura Financial Advisory & Securities (India) Private Limited, JM Financial Limited, and Deutsche Equities India Private Limited.

GCBRLMs carry out regulatory and institutional functions as well as marketing the issue, whereas BRLMs is largely engaged in marketing the issue to the investors.

Moody’s Investors Service Analyst, Corporate Finance, Sweta Patodia said, “OYO’s potential IPO offering will be credit positive as it will strengthen the company’s liquidity and widen its investor base. It will also provide the company with a longer runway to cope with weak operating performance if the disruptions related to the pandemic persist for longer than expected. “

Listing on stock exchanges will also reduce the risks related to governance around corporate transparency and limited public disclosure, he added. It looks like startups are flourishing after this pandemic lockdown.