OYO public issuance will likely be postponed for an additional quarter
- ByStartupStory | January 2, 2023
The market regulator has urged the firm to alter its draft IPO documents, which will likely cause the initial public offering (IPO) of hospitality giant Oyo to be postponed by three months, according to a January 1 article in The Economic Times.
The Securities and Exchange Board of India has asked the Ritesh Agarwal-backed startup Oravel Stays (Oyo) to update risk factors, its key performance indicators (KPIs), ongoing legal actions, and the basis for valuation in the company’s draft red herring prospectus (DRHP), the report said, citing people with knowledge of the situation.
The IPO launch for the company was previously anticipated for the first half of 2023. The procedure for submitting additional modifications will probably take three months or so.
“It would only be prudent to expect investors to put money in on the basis of the latest information, and we have been asked to provide the latest disclosures at the appropriate pre-IPO stage. This is the most sensible course of action now,” a source familiar with the company’s plans told ET. “It may also shift the IPO plans by two-to-three months, but we will be able to show a full financial year of Ebitda profits in the process.”
A recent addition to the DRHP that the IPO-bound company submitted to the Securities and Exchange Board of India (SEBI) in September 2021 has been filed.
The company included its financials for the previous three years in the addendum because prospective investors needed to be made aware of the significant improvement in its business performance since its IPO application.
In the first half of FY2023, the company recorded its first positive adj. EBITDA of Rs 63 crore, a 24% year-over-year rise in revenue, and a 69% increase in the monthly booking value (GBV per month) for its hotels. The company has now been asked by SEBI to amend more important information.
In its letter to the company, the regulator mentioned, “The disclosures contained in present DRHP do not take into account the material changes/disclosures arising from updated financial statements as filed through addenda, leading to revised disclosures,sclosures which in turn leads to necessities to make material updates in Risk Factors, Basis of Offer Price, Outstanding Litigations and update other relevant sections of DRHP.”
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