Indian hotel chain OYO increases share capital for IPO

The increase was approved at a September 1 extraordinary general meeting held via video conference, the company said in a September 5 regulatory filing seen by mint.

The company is also seeking to award nearly 97 cumulative compulsory convertible preferred shares (CCCPS) Series F2 to Salesforce Ventures, it said in a separate regulatory filing with the Department of Foreign Affairs (MCA) on the same date.

“The term ‘shareholders’ agreement ‘means the shareholders’ agreement of the company coming into force and taking effect on the earlier of the following two dates: (i) allocation of 80 Series F2 CCCPS to Microsoft Corporation; or (ii) the award of 97 Series F2 CCCPS to Salesforce Ventures LLC (as may be amended, supplemented, replaced or replaced from time to time), ”Oyo said in the second filing.

“As a leading travel technology company, we receive regular interest from strategic and financial investors. However, there has been no such investment or transaction to date that you are referring to, ”an OYO spokesperson said of the assignment to Salesforce Ventures.

Salesforce India did not respond to mint‘s queries until press time. Salesforce Ventures could not be reached immediately for comment.

Last month, OYO issued nearly 80 Series F2 CCCPS shares with a par value of ??100 each to tech giant Microsoft at an issue price of the rupee equivalent of $ 58,490 per Series F2 share. The investment is expected to value OYO at $ 9.6 billion, mint reported earlier. If similar pricing is followed, Salesforce Ventures’ investment in OYO could reach $ 5.67 million.

“These are great strategic investors who are entering the pre-IPO stage. The terms and conditions of these transactions are generally kept confidential, ”said a banker who works closely with the company, on condition of anonymity.

The expansion of authorized capital comes as OYO is actively exploring a $ 1.2 billion IPO on Indian stock exchanges by early 2022 and has begun talks with bankers such as JPMorgan, Citi and Kotak Mahindra Capital to help resolve the issue.

“It is a common practice that investors’ mandatory convertible preferred shares should be converted into shares, prior to a large liquidity event. Therefore, the authorized capital must be increased before a company files its draft prospectus with the Securities and Exchange Board of India and also makes room for retail investors while going public. Based on the subscription agreements, shares will be issued to investors, ”said Amarjeet Singh, senior partner in international tax and regulation at KPMG India.

OYO raised $ 660 million in debt financing in July from global institutional investors, including Fidelity Investments, through the B term loan channel.

OYO’s aspiration to be listed comes at a time when several startups are flocking to the public markets. The second half of this year is expected to see unicorns, including the Nykaa beauty market, the Policybazaar insurance and loan platform, the logistics major Delhivery and the financial major Paytm list on Indian exchanges.

“Recent listings give even more confidence to large Indian investors to become anchor investors during the pre-IPO stages. Additionally, with listed Indian tech startups continuing to grow, the interest of Indian anchor investors is only expected to grow, ”Singh said.

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Christina A. Kroll

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