OYO plans to launch IPO by year-end; to file DRHP by Sept

Hospitality company OYO Hotels and Homes is planning to launch its initial public offering (IPO) this year. The company has reportedly set a deadline of September to file its draft red herring prospectus and aims to go public before the calendar year ends.

The Ritesh Agarwal-helmed company is in talks with bankers such as JP Morgan, Citi and Kotak Mahindra Capital to manage the public issue, as mentioned in a report in The Economic Times. A person aware of the development told the daily that work has begun and some bankers have been finalised.

Another person in the know said that many details are yet to be filed, including the offer size. An OYO spokesperson declined to comment.

With COVID-19 cases ebbing in India and Europe and increase in vaccination rates, OYO is seeing a revival of its business. It believes that India would reflect a strong recovery once more people are vaccinated, similar to the case in Europe.

The hospitality sector was severely impacted by the pandemic. OYO too saw its fortunes turn downward. It cut down its operations in markets like US and China, and fired a portion of its workforce in India. India and Southeast Asia account for 43 per cent of the company’s revenues, while 28 per cent comes from Europe and rest of the markets.

Nevertheless, with companies like Paytm, Nykaa, Cartrade, Policybazaar, Mobikwik lining up for public offerings following Zomato, the market seems to be excited for startup IPOs.

To this end, IT giant Microsoft, reportedly, is in talks to invest in the company at a valuation of $9 billion. The deal between Microsoft and OYO could be declared soon. In case the deal materialises, OYO might also utilise Microsoft's cloud services. 

Additionally, OYO concluded a debt financing round of $660 million from global institutional investors in order to service its existing loans. Fidelity Investments, Varde Partners, and Citadel Capital are believed to have participated in the funding.

Also read: Microsoft looks to invest in Oyo before potential IPO
Also read: Oyo secures $660 million in debt funding to revive COVID-19 impacted biz