Oyo withdraws IPO papers again, aims to raise money via bonds, equity financing in a down round
Indian budget hotel aggregator Oyo has withdrawn its initial public offering (IPO) papers for the second time in nearly three years, according to recent regulatory disclosures. The company, backed by the Japanese conglomerate SoftBank, pulled its draft red herring prospectus (DRHP) from the Securities and Exchange Board of India (SEBI) on May 17.
While Oyo has not officially disclosed the specific reasons behind the withdrawal, a report in Economic Times sheds light on alternate plans. Oyo is reportedly on the verge of finalizing a significant refinancing plan – a bond issuance valued between $350 million and $450 million. This new bout of financing will require revisions to the company’s financial statements to reflect the impact of the new debt. Since these adjustments would not be incorporated into the previously submitted IPO documents, Oyo has opted to withdraw its application and resubmit it after the refinancing process is complete.
Oyo’s journey towards a public market debut has been anything but smooth. The company’s initial foray into the IPO arena came in 2021, with aspirations of securing a valuation of up to $12 billion. However SEBI, the Indian market regulator, returned the application in January 2023, citing the need for further information and clarifications. Eventually, Oyo responded with a revised filing targeting a smaller IPO size, reflecting a more cautious approach in light of market conditions. Oyo’s decision to withdraw its IPO comes at a time when several other Indian tech firms, such as Ola Electric, FirstCry, and Swiggy, are preparing to go public later this year.
Beyond the planned bond issuance, Oyo is also exploring avenues for additional equity funding. The company is reportedly in talks with private investors for a potential investment round that could value Oyo between $3 billion and $4 billion. This marks a significant drop from its peak valuation of $9 billion in 2021 during a funding round led by Microsoft, and the $12Bn it was seeking in its first IPO.
Despite the challenges, Oyo has been making significant strides in improving its financial health. In a town hall meeting, Agarwal announced that the company expected to achieve a net profit of Rs 30 crore in the third quarter of FY24, following its first profitable quarter in the previous fiscal year. For FY24, Oyo’s revenue is projected to be around $700 million, although the company has yet to file its audited financial statements for the fiscal year. Efforts to streamline operations have included significant layoffs and the departure of several senior executives
