OYO Strengthens its Authorised Share Capital with an IPO in Horizon

Oravel Stays Private Limited, the company that controls OYO Hotels and Homes, has increased its authorised share capital. As per the regulatory filing, it has gone from Rs. 1.17 crores to Rs. 901 crores, denoting quite a significant jump. As per market sources, this move has been initiated by keeping the initial public offering in mind, which is poised to come sometime in early 2022.

The company approved this move in its recent Extraordinary General Meeting held over video conference on 1 September 2021.

What Else Is In The Pipeline?

Besides this increase in authorised working capital, another separate regulatory filing includes an allotment of around 97 series F2 Cumulative Compulsory Convertible Preference Shares or CCCPS. Salesforce Ventures will receive these shares, as mentioned in the 5 September regulatory filing to MCA or Ministry of Corporate Affairs.

Furthermore, this filing with MCA also includes the ‘shareholders agreement’ term in it. Hence, it signifies that the shareholder agreement of the company will come into force with this move.

Moreover, it will affect the current and previous issue of CCCPS, which is –

• Close to 97 series F2 CCCPs to Salesforce Ventures
• 80 series F2 CCCPs to software giant Microsoft

Additionally, the company here holds the right to amend, suspend, supplement, and replace them as required.

Despite the official notification with the Government, no parties have been willing to comment on this point.

However, a banker closely associated with the firm has stated that such investments are common at a pre-IPO stage. These are big strategic investors, and they like to work in a confidential manner. Hence, there has been no official comment from any side.

Point to Note

Last month, OYO issued 80 series F2 CCCPS shares with a face value of Rs. 100 per share to Microsoft Corporation. The issue price of these shares was $58,490 for every F2 series share. This investment pushed OYO’s valuation to around $9.6 billion.

Therefore, if a similar pricing strategy is in place, this current deal with Salesforce Ventures will go up to about $5.67 billion.

What is the Significance of this Investment?

This move to expand authorised capital comes at a point when OYO is exploring the idea of going public. The company is expecting a public issue of about $1.2 billion, and early 2022 is their desired timeline. Investment bankers such as Kotak Mahindra Capital, Citi, and JP Morgan are in charge of helping OYO with this public issue.

According to a market expert, this is a common practice where companies need to convert their Compulsory Convertible Preference Shares into equity shares before launching an IPO. Thus, it needs to strengthen its authorised capital before filing a DRHP and keep room for retail individual investors.

Parting Thoughts

Over the years, OYO has been through its fair share of ups and downs, and the Covid-19 pandemic has hit the company hard. Nonetheless, it still remains a lucrative investment prospect for many. The current $660 million funding in July and Microsoft’s involvement only justifies that claim.

Nevertheless, when launched, the public issue of OYO will attract investors. If you are planning to make a move, ensure to study about the company before investing.

For more details associated with OYO IPO, or any other public issue, keep referring to the Angel One Blogs.

 

Frequently Asked Questions

1. What is the current valuation of OYO Hotels and Home?

The current valuation of OYO Hotels and Homes is $8 billion as per the recent Hurun Global Unicorn Report.

2. When is the IPO of OYO Hotels and Home due?

Early 2022 is the likely timeframe for OYO Hotels and Home IPO, but concrete details are not available yet.

3. Who is the registrar of this OYO Hotels and Home IPO?

There is no information regarding the registrar of OYO Hotels, and Home IPO available yet.