Hospitality unicorn’s much awaited $1.2 billion (Rs 8,340 crore IPO) may suffer further listing delay as well as reduction in offer size in the face of the current global crisis emerging out of Russia-Ukraine war situation as well as the beating tech stocks have taken in global and domestic markets. Sources aware of the development told Business Today that although the Ritesh Agarwal-led firm hasn’t taken a final call on its huge IPO plans, but the major investors are keenly watching the unfolding situation and any plans of postponing the IPO cannot be ruled out. The reduction in the IPO size may happen through a smaller Offer for Sale (OFS) component which, according to OYO’s DRHP, aggregates to Rs 1,430 crore (or 17 per cent of the issue size).
Sources say that although the Softbank-backed firm was hugely hit by the COVID pandemic across the global markets and India, the re-opening of markets and travel is also one consideration which has given confidence to the investors that the company may have better financials to show to the investors and public.
“It is really a Catch-22 situation. They are expecting SEBI nod by April and watching the economic situations closely at home and in the other client geographies.” one of the sources quoted above said.
Detailed questionnaire has been sent to OYO over the developments. The company did not respond to the queries sent by BT.
“The company will file its financials and it could reflect how much the company has been able to turn the tide post the COVID hit its business,” a source said.
Even the valuation concern is huge particularly when the company had earlier said that it will stick to $9.6 billion at which the last fund raise was done, compared to the reported $10-12 billion valuation. However, BT has learned from multiple sources OYO’s valuation for the upcoming IPO may be upto $8 billion.
According to sources, the valuations of tech companies, including OYO and another IPO-bound firm Ola, could see a further drag down in the face of the price-correction Paytm, Zomato stocks have seen in the domestic markets.
At the same time, OYO’s major investor, SoftBank, which has made some robust investments in 2021 across the tech companies globally, is understood have been taking slow approach this year when the public listed unicorn start-up suffered huge losses and the IPOs of one of its portfolio companies, the logistics tech firm Delhivery, has been delayed even after receiving a regulatory nod to its IPO in January this year.
“India’s largest IPO, LIC’s $8 billion public offering, has also suffered delays looking at the macroeconomic conditions globally and the highly volatile markets. The delay in the IPOs of the smaller companies could also be because the LIC listing is not done yet and there couldn’t be enough liquidity in the market,” an analyst at a stock brokerage firm said wishing anonymity.
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