Indian hotel chain Oyo prepares $ 1.1 billion IPO
Oyo, the Indian hotel chain backed by SoftBank’s Vision Fund, plans to raise $ 1.16 billion (or Rs 84.3 billion) through an initial public offering (IPO).
As CNBC reported on Friday October 1, the company plans to issue new shares worth $ 944 million (70 billion rupees), while existing shareholders could sell up to $ 193 million ( 14.3 billion rupees) from their shares.
According to a draft prospectus submitted to Indian market regulators, Oyo is also considering issuing shares worth up to 14 billion rupees ($ 193 million) as part of a pre-IPO placement. The company said it would use the proceeds of the offering to pay off its obligations and fuel its growth, possibly through mergers and acquisitions.
Besides SoftBank, Oyo’s other top funders include Lightspeed Venture Partners and Sequoia Capital India.
Oyo has a turnkey business model: in exchange for room prices and reservations, independent hotel owners receive a portion of the revenue and fees collected, provided they agree to rebrand as a hotel. Oyo.
Read more: Indian hotel start-up Oyo prepares for IPO
As PYMNTS reported last month, Oyo’s business model initially flourished, but faltered thanks to the imposition of COVID-19 travel restrictions in 2020.
Last September, SoftBank – which owns a 46% stake in Oyo – made the decision to lay off staff, while canceling $ 75 million that had been allocated to Oyo’s growth in Latin America. Around the same time, Oyo scaled back its operations in Japan. In February this year, Oyo announced that it would lay off almost all of its staff in Latin America and cut funding as it moved towards a digital-only model.
Oyo’s offer follows a busy IPO season in India. This list follows other high-profile debuts including food delivery company Zomato Ltd, Berkshire Hathaway-backed Paytm, and TPG-backed private equity firm Nykaa. Another SoftBank-backed company, ridesharing company Ola, is also set to go public.