India: According to reports, Indian hospitality chain OYO is seeking to raise $250 million from investors in a pre-IPO [initial public offering] funding round.
It is believed that a substantial portion of the funding would be directed to settling OYO’s $660 million term loan B and eliminate its debt ahead of an IPO later this year, according to The Arc. The same reports suggest that the unicorn, which is 47 per cent owned by Softbank, will offer secondary shares at a reduced price to appeal to more investors.
Previously valued at a high of approximately $10 billion, OYO looks set to achieve a valuation in the range of $3 billion to $5 billion when it goes public, although figures differ according to sources. The hospitality chain is targeting a date around the Indian festival of Diwali, which falls on 12 November next month.
OYO first filed to go public via an IPO in 2021 but its prospective listing has been delayed multiple times, including in January when the national Indian capital markets regulator, the Securities and Exchange Board of India [Sebi], asked OYO’s parent company to refile its draft IPO papers with certain updates. It has also suffered from plunging valuations for technology firms that also wanted to go public since the Covid-19 pandemic.
In March, the company confidentially submitted a “pre-filing” document to resume its IPO this year.
Since then, OYO has undergone a boardroom reshuffle, with Varun Jain [OYO India COO] and Gautam Swaroop [OYO Vacation Homes CEO] taking over roles vacated by Ankit Gupta [India CEO] and Mandar Vaidya [head of OYO’s European operations] earlier in 2023. Meanwhile, Rakesh Kumar has been promoted to the role of deputy chief financial officer [deputy CFO].
Only last week, it was revealed that OYO was in talks with private equity firm Apollo Global Management to refinance the $660 million loan, which has a current deadline in 2026, in preparation for the IPO.
A company spokesperson told Inc42: “Since the turnaround in our business performance, we regularly get approaches for institutional investments. We are, however, focused on the SEBI approval process.
“We have also heard many such rumours in the past few weeks with different valuation ranges and numbers. They are purely speculative market gossip,” they added.
Some of OYO’s key investors include the likes of Lightspeed, Softbank and Peak XV [formerly Sequoia India].