OYO Reduces IPO Size to $400-$600 Mn and Aims for Diwali Listing
- ByStartupStory | April 1, 2023
OYO has submitted its draft red herring prospectus (DRHP) via the confidential pre-filing route, three months after being instructed to do so by the Securities and Exchange Board of India (SEBI). The company will issue fresh shares to raise funds and repay its debts. Additionally, the DRHP has been filed with a reduced size.
Sources suggest that OYO is aiming for a public listing near Diwali with SEBI’s approval, although the company declined to comment. It’s worth noting that the hospitality giant had initially filed its DRHP in September 2021, with plans to raise $1.2 billion through the market listing. By using the confidential pre-filing route, OYO will have more flexibility on the timing of the listing and can adjust the issue size based on market conditions, according to an insider.
Utilizing the confidential pre-filing route gives companies preparing for an IPO greater adaptability with their issue size during the early stages. This method enables them to modify the primary issue size by up to 50% until they file an updated DRHP with the regulator. Furthermore, the traditional IPO filing process requires startups to conduct an IPO within 12 months of receiving approval from SEBI. In contrast, the new route permits firms to launch an IPO within 18 months of SEBI’s final comments.
OYO has filed an addendum to its DRHP in September 2022 after postponing its IPO plans. However, in January 2023, SEBI required OYO to refile its IPO paperwork due to insufficient updated financial disclosures for the September quarter of FY23 in its prospectus. Nonetheless, OYO’s financial position has notably improved since its last filing. The company has reduced some of its losses and reported its first EBITDA positive quarter in Q1 FY23. CEO Ritesh Agarwal recently stated that OYO is well-positioned to achieve revenue of INR 5,700 Cr in FY23 and is targeting an EBITDA of nearly INR 800 Cr in FY24.
Amid the ongoing global economic downturn, numerous Indian new-age tech startups such as Droom, MobiKwik, PharmEasy, and boAt have either postponed their IPO plans or withdrawn their DRHP. In contrast, OYO is in a strong position to capitalize on its leadership position in the hospitality sector. According to a report, the domestic hotel booking segment is predicted to grow to a value of $7.6 billion by the conclusion of 2023.
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