Oyo Cancels IPO Launch In 2022: Current Market Sentiments Can Hurt Its Valuation

After a lot of speculations, leading Indian hospitality start-up OYO has finally shelved its plans to launch its IPO in 2022.

The main reason behind this decision is that the company fears a dent in its valuation after the market downturn.

OYO Cancels Its IPO Launch in 2022

The company filed preliminary IPO documents last year and is now after regulatory permission for introducing an update to its draft prospectus. This will be with fresh financial information after the end of the September quarter. 

Additionally, the company’s bankers led by Kotak Investment Banks have filed the request with SEBI.

The board of OYO, originally named Oravel Stays Ltd. has reportedly discussed a change in the offering’s timing during several meetings last week and this week as well. As per sources close to the development, the board will be doing this after consulting with its bankers and investors. 

These sources have confirmed that if the company picks up the process again by the end of the year, an IPO will be launched as early as possible, which would be in 2023. 

The Federation of Hotel and Restaurant Associations of India (FHRAI) has requested SEBI to call off OYO’s Initial Public Offering (IPO) citing the massive losses suffered by the SoftBank-backed company in recent years.

OYO Closed Debt Financing Round of $660

OYO had decided to raise capital through its IPO last year, after it closed a debt financing round of $660 million from institutional investors, in order to do away with some existing debts and push its product tech and operations.

Also, the Ritesh Agarwal-owned hospitality startup will be discussing a discount of 15% on the $10 billion suggested in early discussions by the bankers, which an OYO representative declined to comment on.

OYO plans to raise a total of about Rs 8,430 billion or $1.1 billion through its listing, via the sale of new shares and some secondary shares, or those held by existing investors, added the Bloomberg report.

As per information, the IPO will majorly comprise of primary shares, or those sold by the company, along with a smaller portion of secondary stock.

However, SoftBank which holds 47% of equity in the hospitality major will sell a small of its shares in the company, while OYO’s founder Ritesh Agarwal, who holds 33% stake in the company will not dilute his share.