India’s hotel giant OYO Hotels and Homes has finally filed for Rs 8,430 crore IPO with Securities and Exchange board of India (SEBI) that comprises issue of fresh equity shares of Rs 7,000 crore and offer for sale of Rs 1,430 crore.
The move was taken as soon as the travel restrictions had been lowered in the country.
OYO IPO Details (as per DRHP)
- Ritesh Agarwal and his holding company – RA Hospitality Holdings have a total of 33% stake in the company and SoftBank Group Corp. has a 46% stake in the company. As for other shareholders include:
- Dinesh Ramamurthi (also known as the trustee of Oravel Employee Welfare Trust) with 5.40% stake.
- Sequoia Capital India with 3.24% stake.
- Lightspeed Venture Partners with 2.74% stake.
- Airbnb Inc. with 1.36% stake.
- The company will be using Rs 2,441 crore against the issued amount to back the debt of its subsidiaries companies. It consists of Oravel Stays Singapore Pte Ltd, Oravel Hotels LLC and Oyo Hospitality Netherlands BV, Oyo Singapore and OHL.
- There are 4 banks that have been appointed as the book managers for the IPO. Which consists of Kotak Mahindra Capital, Citigroup, ICICI Securities, Nomura and Bank of America.
- Talking about the company’s financial performance. The company showed a total income of Rs 4,157 crore. While net loss for fiscal year 2021 stood at Rs 3,943 crore from Rs 13,122 from past year.
- Currently the valuation for the company can’t be determined as DRHP has defined the number of shares or the price band. But as per some of the earlier news in the market. The company was aiming for a $12 Billion valuation and their last valuation was valued at $9 Billion.
Risks Mentioned By OYO IN DRHP
- The company has mentioned that they will be facing some issues to grow at the same rate they were growing in the past. As they are facing issues with implementing the growth plans.
- Negative marketing can have a bad impact on the functioning of the company. Which may lead them to not compete with full ability.
- “If we fail to retain existing patrons and customers or acquire new patrons and customers in a cost-effective manner, our revenue may decrease and our business, results of operations and financial condition could be adversely affected,” as per OYO.
- “If we do not continue to innovate and develop our platform, our platform developments do not perform or we do not keep pace with technological developments, we may not remain competitive and our business and results of operations could suffer,” as per OYO.
- The outcome from one of the legal proceedings that involves Zostel can adversely affect the business and its reputation. Which may even involve the loss of wealth.
- “There is pending litigation against our company, certain of our subsidiaries and directors and promoter 1. Any adverse decision in such proceedings may render us/them liable to liabilities/penalties and may adversely affect our business, cash flows and reputation.”
- A decline in the travel industry can affect the business operations severely.
- OYO works in a very competitive industry be it local or globally. This can even result in the company operating successfully.