6 key findings from Oyo’s $1.2b IPO filings

Ritesh Agarwal was 19 years old when he founded Oyo in 2012. Almost a decade later, he is hungry for more.

Agarwal is one of the youngest billionaires from India, and his hospitality company is ready to go public soon.

The entrepreneur believes that “when times are low is when great companies get built.”

The Covid-19 pandemic burned a hole in Oyo’s revenue and pushed it to furlough and layoff hundreds of its employees. But that isn’t stopping it from taking the next big step.

The company filed its draft red herring prospectus (DRHP) for a US$1.2 billion initial public offering (IPO) with the Securities and Exchange Board of India (Sebi) last week, eyeing a valuation of up to US$12 billion.

Oyo was valued at US$9 billion after it raised an undisclosed amount from Microsoft in July.

The IPO offer consists of a fresh issue of equity shares worth US$943 million, as well as an offer for sale – which happens when owners of a company sell their shares to the public – of up to US$193 million.

Tech in Asia analyzes Oyo’s filings as the firm looks to join India’s IPO rush alongside companies like Paytm, PolicyBazaar, and Nykaa.

1. SoftBank to offload its shares

Some of the biggest global investors have backed the Indian hospitality firm. These include Lightspeed Venture Partners, Sequoia Capital, Didi Chuxing-controlled Star Virtue Investment, Greenoaks Capital, Airbnb, HT Media, and Microsoft. None of these big-name investors are diluting their shareholding in the company.

Meanwhile, SoftBank, which holds an over 46% share in the company, has offered to sell a stake worth US$179 million. Grab’s A1 Holdings, China Lodging Holdings, and Global Ivy Ventures are also offloading some of their shares in the company.

2. Revenue battered by Covid-19

3. Cutting down on expenses

4. Narrowing operating losses

5. Gross profit margin improves

6. Legal hurdles on the IPO road