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Exclusive: OYO’s $1.2 billion IPO slated for early next year; targets $10 -12 billion valuation

Exclusive: OYO’s $1.2 billion IPO slated for early next year; targets $10 -12 billion valuation

According to sources, a pre-IPO placement round of nearly $200 million is also on the table.

OYO for now is sticking to $10 billion- $12 billion valuation for the IPO OYO for now is sticking to $10 billion- $12 billion valuation for the IPO

Hospitality major OYO’s $ 1.2 billion IPO is slated to happen early next year, sources aware of the Gurugram-based unicorn's public listing developments have told BusinessToday.in 


The company was expected to list on the stock exchanges this year but is now likely only next year as the regulatory process is still underway, BT has learnt from multiple sources. 


The company, for now, is sticking to a $10-$12 billion valuation for the IPO as against the $9.6 billion during the last fundraise in September this year when tech giant Microsoft put in $5 million in the startup.


”A pre-IPO placement round of nearly $200 million is also on the table with the regulatory approvals awaited,” sources said.


OYO offered no comments to our queries.


India's market regulator Securities and Exchange Board of India or SEBI is yet to issue approvals to the IPO in response to OYO’s Draft Red Herring Prospectus or DRHP filed in October this year. The company plans to raise Rs 8,430 cr or $1.2 bn through the public listing. 


The offer comprises fresh issuance of up to Rs. 7,000 cr or $966 million and an offer for sale aggregating up to Rs 1,430 cr or $197 million.


Despite the onslaught of COVID-19 on the hospitality sector, the company said in its filing that due to its various cost-cutting measures, their Adjusted Gross Profit Margin improved from 9.7 per cent in FY20 to 33.2 per cent in FY21 along with a ~79 per cent reduction in EBITDA losses from FY20 to FY21.


OYO plans to use the net proceeds from the Fresh Issue Prepayment or repayment, in part, of certain borrowings availed by certain subsidiaries, funding organic and inorganic growth initiatives and general corporate purposes.


The hospitality chain is also involved in a legal tussle with a smaller rival Zostel, which approached SEBI seeking suspension of OYO’s IPO on account of inadequate disclosures in its DRHP. The Federation of Hotels and Restaurant Association of India or FHRAI has also sought SEBI's intervention.