New Delhi: The hospitality and travel technology company OYO plans to launch its first public offering after September and has written to stock market regulator Sebi to submit updated and revised consolidated financial information.
The company, which had submitted preliminary papers with Sebi to address ₹8,430 crore through a first share sale in October last year, is now prepared to settle for a lower valuation of about USD 7-8 billion against the USD 11 billion that was initially targeted, according to people familiar with the development.
OYO’s move to launch the IPO after the September quarter is mainly driven by expectations of improvements in its financial results and the market’s current volatility, they said.
It is understood that Oravel Stays Ltd, which operates OYO, in a letter to Sebi has applied for permission to include recalculated financial statements for the six-month periods ending September 30, 2022, September 30, 2021 and September 30, 2020.
“Price fluctuations in a newly listed stock create concern among the public. Among such sentiments, it will be best to first be able to show investors that the revival of companies is real, it is strong and leads to much higher bookings and perhaps, the first sign of a positive “Therefore, OYO will probably wait a quarter,” said one person aware of the company’s plans.
When OYO reached out for comments, OYO declined to comment.
The company’s proposed IPO included a new issue of shares with a total of up to ₹7,000 crore and an offer for sale for the size ₹1,430 crore, according to its DRHP.
However, it has been reported that OYO now just wants to move on ₹7,000 crore primary issue, to abolish ₹1,430 crore offer for sale (OFS) component and has contacted Sebi for approval. An OFS allows promoters of a company to sell their shares to the public via the stock exchange.
OYO’s OFS would have seen its largest investor Softbank Group sell about 2 percent of its stake and other investors Grab Holdings, Huazhu Hotels and Sunil Munjal’s family offices from Hero Group also diluted their shares.
In addition, when OYO goes for listing on the markets, it will be content with a more reasonable valuation of about USD 7-8 billion, below the USD 11 billion that was initially targeted, given how the stock markets have changed during the in recent months, a source said.
When the company submitted its DRHP to Sebi in October 2021, the markets were lively and IPOs received high valuations and oversubscriptions with both global and domestic capital flowing into the stock market.
However, the scenario has changed since then, with geopolitical concerns, rising inflation and a cycle of interest rate hikes.
In August 2021, when OYO raised $ 5 million from Microsoft, it was valued at $ 9.6 billion.
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