Hotel and hospitality chain Oyo is planning to go public with an IPO of about $1 billion. The company is expected to file its draft red herring prospectus (DRHP) next week, as confirmed by sources close to the company.
This initial public offering is expected to have a valuation of between $1 billion to $1.2 billion, and it will comprise both fresh issue equity shares and an offer for sale. The hospitality major, backed by SoftBank Group, has recently appointed Citi Group, JP Morgan, and Kotak Mahindra Capital as their book running lead managers for this public issue.
Furthermore, company sources have confirmed that the IPO papers are prepared, and they are awaiting final approval from the company to go ahead. They are expecting it to be filed before 30 September 2021. However, Oyo has declined to make any official comment.
More on Oyo’s IPO
Oravel Stays, the parent company of Oyo Hotels and Homes, approved the decision to convert the company into a public limited one from a private limited one. In this regard, the company also raised its authorised share capital from Rs. 1.17 crores to Rs. 901 crores. They did so via bonus issue shares and stock split.
The face value of shares has been split into a 1:10 ratio for all preference and equity shares.
Additionally, Oyo has also issued 3999 bonus shares against every share held. Hence, for preference shareholders, the current equity share conversion ratio stands at 1:4000 from the 1:1 previous ratio.
This bonus allotment was intended for 15 equity shareholders. This included –
- Founder of Oyo Mr. Ritesh Agarwal
- SoftBank Group
- Microsoft Corporation
- Sequoia Capital
- Lightspeed Venture Partners
- Travel Employee Trust Fund
Along with these, there are other preference shareholders who were a part of this allotment.
Oyo’s Recent Tie-Up with Microsoft
The global software and technology behemoth Microsoft Corporation has recently entered a strategic partnership with Oyo Hotels and Homes. Together they aim to develop modern hospitality products requiring technology.
The software giant invested $5 million, giving Oyo Hotels and Homes a valuation of around $9 billion.
Even though it sounds confusing when mentioning Oyo and Microsoft in similar lines, this move holds potential. As per sources, with this deal being materialised, Oyo will shift to Microsoft’s Azure platform.
Wondering why is it a big deal?
It is because Microsoft is eyeing to acquire a larger share of a pie that is India’s cloud computing market. Reports from the Boston Consulting Group suggest that the cloud computing market of India is likely to reach $8 billion by 2023.
The Covid-19 pandemic left Oyo Hotels and Homes cash strapped, as the company lost almost 60% of its business in one month. Also, several issues surrounding the company’s business tactics left a big financial impact. However, as per the company’s estimation, it is recovering strongly as Covid-19 related travel restrictions are easing globally.
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Frequently Asked Questions
- Who is the registrar of Oyo’s IPO?
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