Hospitality Unicorn OYO Shortlists JP Morgan, Kotak Mahindra And Citi For IPO

Hospitality unicorn OYO Hotels and Rooms announced today that it has shortlisted investment banks JP Morgan, Kotak Mahindra Capital and Citi for an initial public offer ( IPO) to raise in excess of a billion dollars.

According to a report by Moneycontrol, the above-mentioned banks were taken on board recently and have begun to work on all issues. 

The announcement by OYO comes along with rising expectations of the Seattle based Microsoft investing in the SoftBank backed Indian unicorn. This would further value the company at approximately $9 Bn. 

“The firm is leaning towards a domestic IPO but has kept alternate options open. More i-banks may be added later,” Moneycontrol quoted an industry expert.

According to other sources that Moneycontrol quoted, the plan may be to raise in excess of $1.2 Bn, though the size hasn’t been finalised and may vary at a later stage. It is also possible that the proposed IPO is likely to be a combination of chiefly primary issuance of shares along with a secondary component.

This announcement also came a few months after the hospitality startup announced that it had raised a $660 Mn in term loan B (TLB) funding from global institutional investors. This offer was oversubscribed 1.7 times.

Founded in 2013 by Ritesh Agarwal , OYO became the first Indian startup to be rated by international ratings agency Moody’s and Fitch ahead of the TLB funding. It had also said earlier that its India business became EBITDA positive just before the onset of the second wave.

The hospitality industry still remains one of the worst affected sectors due to the pandemic. For instance, in spite of raising more than $800 Mn from SoftBank and RA Holdings in 2020 and $7.5 Mn from Hindustan Media Ventures earlier this year, OYO has been cautious during these troubled times and continues to trim unviable/loss-making business models.

It also gave up the leases of its two flagship corporate offices in Gurugram, invoking the ‘force majeure’ clause that provides a reprieve to a party from performing its obligations under a contract due to calamities beyond human control. 

Following a robust response to Zomato’s public offering, which was subscribed by over 40 times, many startups apart from OYO such as Paytm, MobiKwik, PolicyBazar, and CarTrade are also planning to list on the Indian stock markets.

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