Hospitality firm OYO says that it is already conducting background work to launch its initial public offering (IPO). However, the decision to go ahead will depend on several factors, including market readiness, market appetite, COVID recovery, and the company’s internal readiness.
OYO is an Indian multinational chain of franchised and leased hotels, homes, living spaces, and more. Ritesh Agarwal founded it in 2013. This Softbank-backed start-up has recently expanded in more than 80 nations, including Malaysia, China, Nepal, UAE, the UK, Japan, and Saudi Arabia.
OYO has some well-known investors such as Airbnb, Greenoaks Capital, China Lodging Group, etc.
According to OYO’s Chief Financial Officer, Abhishek Gupta, and OYO’s audit committee and board intend to go for a ‘public market event’ within this year. While commenting on Zomato’s recent IPO, he states that these IPOs will bring in a new era in the consumer internet ecosystem.
Recently, Fitch and Moody have placed OYO in the non-investment grade category. Gupta believes that B3 and B flat ratings are quite decent, considering their competitors and the environment that they function within. He has also revealed that OYO currently has a massive debt of $660 million.
OYO’s business has suffered immensely due to this pandemic and subsequent restrictions. However, its business recovered to some extent in January, February, and March 2021.
Bookings shot up between the first and second COVID waves, and business recovered to 50-60% of the pre-pandemic level.
OYO was profitable for three-four months of early 2021. However, booking dropped, and business went downhill again in the second quarter. According to a statement from OYO, it’s clocked a revenue surge in the past two weeks.
The recent IPOs of big-shot Indian brands like Zomato have created much curiosity among young investors. If all goes well, OYO plans to file for its initial public offering by the end of 2021.
However, a lot rides on the vaccination drive and how the government handles the subsequent waves. If all goes well, the hospitality industry could be well on its tracks to recovery, positioning OYO in rich lands to clock close to pre-pandemic level profits and float its IPO.
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The dates for the OYO IPO are yet to be finalised.
Not yet decided.
Details will be released after the final announcement.
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