Key Points of OYO Files Fresh DRHP for IPO:
- Oyo is pre-filing a draft red herring prospectus with SEBI to raise $400-600 million through an IPO.
- The pre-filing option allows companies to float an IPO within 18 months of SEBI’s final comments, providing greater flexibility on issue size during the initial stage.
- Oyo has the option to revise the IPO size, with sources suggesting it may go up to $900 million if market conditions remain stable.
- The objective of the issue is to repay most of the debt.
- Oyo reported an uptick in its business performance in its last submission to SEBI in November 2022, with a bounce back in topline, an increase in gross margins, and a reduction in losses.
- Oyo expects to achieve an Adj. EBITDA of nearly Rs 800 crore in FY2024 and is taking measures to maintain healthy cash flow and cost-effective operations.
- SEBI allowed the pre-filing route option in November 2022, bringing in globally popular practices to offer companies greater flexibility on issue size during the initial stage.
- The sustained growth in India, Indonesia, the US, and the UK, as well as optimization and synergies in its European vacation homes business, has contributed to Oyo’s performance.
Details of OYO Files Fresh DRHP for IPO:
Oyo, the hotel aggregator, is pre-filing a draft red herring prospectus with the Securities and Exchange Board of India (SEBI) to raise $400-600 million through an initial public offering, according to sources. Unlike the traditional route, where companies must launch an IPO within 12 months of SEBI approval, the pre-filing option allows companies to float an IPO within 18 months of SEBI’s final comments.
This provides greater flexibility on issue size during the initial stage and allows for changes of up to 50% until the Updated Draft Red Herring Prospectus stage.
Oyo has the option to revise the IPO size, with sources suggesting it may go up to $900 million if market conditions remain stable, close to the $1.16 billion benchmark previously planned. The objective of the issue is to repay most of the debt.
Oyo’s last submission to SEBI in November 2022 showed an uptick in its business performance, reporting a bounce back in topline, an increase in gross margins, and a reduction in losses. It also reported its maiden positive Adjusted EBITDA of Rs 63 crore, a 24% year-on-year increase in revenue, and a 69% increase in monthly booking value (GBV per month) for its hotels in H1 FY2023.
In a recent employee town hall, founder Ritesh Agarwal stated that the company expects to achieve an Adj. EBITDA of nearly Rs 800 crore in FY2024 and is taking measures to maintain healthy cash flow and cost-effective operations.
The company has a current cash balance of approximately Rs 2,700 crore, and its reliance on external funds has gradually decreased over time. The performance is attributed to sustained growth in India, Indonesia, the US, and the UK, as well as optimization and synergies in its European vacation homes business.
Agarwal expects Oyo’s adjusted EBITDA for H2, FY2022-23, to rise threefold to around Rs 185 crore, marking the company’s first financial year of adjusted EBITDA profitability.
SEBI allowed the pre-filing route option in November 2022, bringing in progressive and globally popular practices to offer companies greater flexibility on issue size during the initial stage. Companies can now take advantage of the confidential pre-filing route to adjust their issue size by up to 50%. The IPO size revision by Oyo could allow it to raise up to $900 million if market conditions remain stable.
The company’s performance is due to sustained growth in India, Indonesia, the US, and the UK, as well as optimization and synergies in its European vacation homes business.
About OYO:
OYO Rooms, which also operates as OYO Hotels & Homes, is a multinational hospitality chain based in India that leases and franchises hotels, homes, and living spaces. Ritesh Agarwal founded the company in 2012, with its primary focus being on budget hotels at the time.
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