OYO Hotels and Homes, the once stand-out Indian startup, struggled during the pandemic, and it is now eyeing a $9 billion valuation with its public market debut. Backed by SoftBank Group, this company is likely to receive a green light from SEBI to float its IPO. It filed the DRHP last year but faced various legal troubles that have halted this process since then.
Individuals related to the matter have confirmed that there will be a formal roadshow once the final prices are set.
OYO’s Valuation Target
Even though no official comment is available from OYO Hotels and Homes, experts predicted a sub-$12 billion valuation for this company last year. However, it seems this valuation will even drop below the $10 billion mark that the startup reached in 2019.
On the basis of anonymity, a company executive commented that Ritesh Agrawal, the founder, is willing to offer up to a 15% discount on the $10 billion valuations.
What’s the reason?
This restrained stance from OYO can be due to multiple reasons. To start with, the decline in the US Tech Stocks is likely to have a direct impact on the valuation of this startup. Additionally, the previous financial struggles of this firm are also keeping its executives on their ‘toes’ and cautious about pushing any boundaries.
This measured approach is also a direct reflection of what happened with Paytm. The online payment behemoth raised about $2.4 billion with its Dalal Street debut in November 2021. However, its shares quickly ‘tanked’, and now they are trading at half their IPO prices.
Everyone associated with this firm and the stock market is keeping a keen eye on the IPO demand of OYO. As this Indian startup creates its order book, it is planning to raise more than Rs. 8,000 crores via share sales. Once realized, it will put OYO right behind companies like Paytm in terms of funds raised through an IPO.
Who Is Participating in This Share Sale?
This public offering of OYO Hotels and Homes will mainly include primary shares and a small portion of secondary shares. SoftBank, which holds 47% equity in this firm, aims to offload a small portion.
However, Ritesh Agrawal, who owns one-third of the stocks, will not dilute any part of his stake with other investors like Sequoia Capital, Greenoaks Capital Management, and Lightspeed Ventures.
OYO Hotels and Homes have played a key role in expanding India’s hospitality industry and offering an affordable yet pleasant experience to customers. However, this ongoing pandemic hit the company like a ‘wrecking ball’.
Nonetheless, with a fresh approach and mended business model, this startup is recovering and planning to lead this segment like before.
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Source: Economic Times
Frequently Asked Questions
- What is the price band of OYO’s IPO?
The price band of OYO’s IPO is not available yet.
- Who are the lead managers of this OYO IPO?
The lead managers of this OYO IPO are ICICI Securities, Bank of America, Citi Group, Nomura Capital, Kotak Mahindra Capital.
- Where will the shares of OYO be listed?
The shares of this hospitality company will be listed on BSE and NSE.
Disclaimer: This blog is exclusively for educational purposes and does not provide any advice/tips on investment or recommend buying and selling any stock.