Friday, July 12, 2024
Home News Oyo plans to cut IPO size amid tech headwinds

Oyo plans to cut IPO size amid tech headwinds


OYO Hotels is offloading the shares it aims to sell by way of a stock-market debut, in an attempt to complete the sale even as its founder downgraded technical valuations.

The once-high-flying company is preparing to file a new initial public offering document as soon as this week, said two people familiar with the matter, who asked not to discuss internal matters. In the filing, Oyo will outline plans to sell just a third of the originally planned new shares, reducing the amount of fresh capital it will receive, one of the people said.

The plan shows how founder Ritesh Agarwal, 29, is trying to go ahead with the IPO even on weaker terms to ease the financial pressure on the hotel and lodging booking company and on himself. While the travel market has recovered from the pandemic-era trough, Oyo – once valued at around $10 billion as India’s Airbnb-equivalent – is still reporting mounting losses. Meanwhile, Agarwal took on billions of dollars in debt to increase his stake in the firm.

The situation remains fluid and Agarwal or Oyo may still fine-tune their targets. This is the second attempt at an IPO by the SoftBank Group Corp-backed startup after India’s stock market regulator raised several red flags in its first attempt in late 2021. Since then, valuations of technology companies have declined following a spike in inflation and rising interest rates. That left low-spending customers and raised concerns about a possible recession.

No shares will be offered for sale by existing investors in Oyo, the people said. SoftBank owns about half of the startup, which is formally called Oravel Stays Ltd. and counts Airbnb Inc. as its backer.

Oyo did not immediately respond to emails, texts and calls seeking comment.

The company was targeting a valuation of around $9 billion and updated its IPO documents for early 2022, but SoftBank later cut its estimate for Oyo to $2.7 billion. The valuation of the IPO will be finalized closer to the listing through a book-building process, but is far from what the company originally envisaged.

Agarwal, his holding company RA Hospitality Holdings and SoftBank Vision Fund remain the three promoters of the company with no changes from the 2021 prospectus, according to one of the people. In 2019, Agarwal raised his stake to 33% at a valuation of $10 billion after securing a $2 billion loan from Japanese lenders in his personal capacity with the backing of SoftBank founder Masayoshi Son.

Agarwal and Oyo’s SoftBank-dominated board are urged to press ahead with IPOs despite a punitive environment for tech IPOs and high-profile failures by Indian startups over the past 18 months, said one of the people. It would be a way to prove to Japanese lenders that the founder and his startup are still worth billions.

When Agarwal got married in Delhi this month, Son made a rare trip from his Tokyo base to attend the festivities with a entourage of SoftBank executives.

Although Agarwal is not legally required to disclose details of his personal loans in the IPO draft prospectus, he has been warned that regulators may still view this as an investor risk and block the IPO indefinitely on other technical grounds. may delay or reject.

Oyo’s business has shown signs of recovery post the pandemic in the travel and hospitality industry. The startup has restructured itself as a technology company, moving away from an asset-heavy, capital-intensive model across several continents that has caused billions of dollars in losses, soured relations with hoteliers and court battles Hui.

Agarwal founded OYO in 2013 after dropping out of college. Backed by the son of SoftBank when he was 21, the Japanese billionaire then took the founder under his wing, mentored him and later provided personal guarantees for his billion-dollar loans.


Markets end FY23 in style; Sensex Nifty rally nearly 2% on firm global trends

Market, The final day of the fiscal year 2022-23 saw gains for benchmark indices, with a gain of nearly 2% on Friday, extending gains for...

Day trading guide for today: 6 stocks to buy or sell on Friday — 31st March

Trading, Day trading guide for today: Indian shares gained on Wednesday as global markets' increased risk appetite was aided by easing in the banking industry....

Financial, IT stocks aid Indian shares snap three-month losing streak

Financial, By Bharat Rajeshwaran BENGALURU (Reuters) - Indian shares rose on Friday, supported by a higher weighting of financial stocks and information technology (IT) stocks,...


Please enter your comment!
Please enter your name here


Most Popular

Trading the Inside Bar Pattern on Pocket Option Platform

Inside Bar Pattern Introduction Price movement on a chart is examined in price action trading. You may use candlesticks to predict where prices will move...

“Unlocking the Secrets: 4 Tricks of Successful Traders on Pocket Option Platform”

For a year, I have been trading on the Pocket Option platform. I sometimes succeed and sometimes fail. However, I was confident that if...

Identifying Mistakes That Lead to Losses on Pocket Option

Why do people lose their money when trading binary options New traders frequently take a significant financial risk while trading binary options. As a result,...

Weekly Income Plan on Pocket Option Platform”

Get weekly returns on Pocket Option It turned out that October was a terrific month for me. I am still able to generate money every...

Recent Comments