Amid Delay In IPO, OYO Looking To Raise $250 Mn

SUMMARY

A substantial portion of this funding will be allocated to settle OYO’s $660 Mn term loan B

The startup also plans to offer secondary shares at a reduced price compared to the primary capital raise valuation to make the funding round more attractive for the investors

OYO, which first filed its DRHP in 2021, took the confidential route to pre-file its draft documents earlier this year. It also cut the IPO size to $400-$600 Mn

Hospitality unicorn OYO is reportedly looking to raise $250 Mn from investors amid the delay in its initial public offering (IPO).

A substantial portion of this funding will be allocated to settle its $660 Mn term loan B, The Arc reported.

The startup also plans to offer secondary shares at a reduced price compared to the primary capital raise valuation to make the funding round more attractive for the investors, the report said.

While the final valuation remains undecided, discussions with investors have revolved in the range between $3 Bn and $5 Bn. If this estimate holds, it signifies a significant decline from OYO’s peak valuation of $10 Bn in 2019.

“Since the turnaround in our business performance, we regularly get approaches for institutional investments. We are, however, focused on the SEBI approval process. We have also heard many such rumours in the past few weeks with different valuation ranges and numbers. They are purely speculative market gossip,” an OYO spokesperson told Inc42.

Earlier, it was reported that amid the delay in the IPO, the Ritesh Agarwal-led unicorn was in talks to refinance its $660 Mn term loan B with Apollo Management.

The term loan B was availed by OYO during the height of the COVID-19 pandemic in 2021, when its core business was down as travel and tourism industry came to a standstill.

OYO initially filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) in 2021 for an INR 8,430 Cr IPO. However, its public listing has been delayed due to various reasons. Earlier this year, it took the confidential route to pre-file its draft documents and cut the IPO size to $400-$600 Mn.

In a recent internal email sent to OYO’s top brass, founder and CEO Agarwal claimed that OYO was on track to report its first-ever profitable quarter in Q2 FY24. He said the hospitality giant would report a profit of INR 16 Cr for the quarter.

The startup’s operating revenue rose 14% year-on-year to INR 5,463 Cr in FY23, while loss reduced 38% to INR 1,286 Cr.