OYO IPO: Oyo will apply again for IPO, know what is the plan of the hotel company

Hospitality chain OYO Rooms, invested by Japan's SoftBank Group, may soon launch its IPO, for which investors have been waiting for a long time. News agency PTI quoted sources as saying that this global travel tech company is very close to finalizing its re-financing plan to raise $450 million through the sale of dollar bonds. JPMorgan is the potential lead banker for the refinancing through the sale of dollar bonds at an expected annual interest rate of 9 to 10 percent.

Oyo has already requested to withdraw its current draft red herring prospectus (DRHP) from market regulator SEBI. First, the company wants to re-finance in order to strengthen its financial position. Next, it will submit the revised DRHP file to SEBI. A company's financials, trading activities, industry standing, promoters, and listed or unlisted traders are all detailed in the document known as the DRHP.

DRHP provides a general explanation of the company's goals and the reasons behind its desire to raise capital through an initial public offering (IPO). It also contains details on the types of risks associated with the investment. Such as whether the business is profitable or losing money, and whether it is involved in any legal issues. By assessing all these things, it becomes easier for investors to decide whether they should invest money in an IPO or not.

OYO's parent company Oravel Stays Ltd had prepaid a large part of its debt of Rs 1,620 crore through the buyback process in November. Now its outstanding loan has been reduced to about $450 million.

Sources close to Oyo's IPO planning told PTI that the re-financing will lead to significant changes in Oyo's financial statements. This will increase the loan repayment deadline and also reduce the current interest rate by 14 percent. Its entire share will be added to its net profits. So as per the existing rules, it will have to amend its filings with the regulator.

Oyo, owned by Ritesh Aggarwal, believes that the matter of its re-financing has gone a long way. Hence, there is no point in continuing with the IPO application with the current financial situation. In such a situation, it would be wise to withdraw the existing application. The company is also considering raising an equity round to reaffirm investor confidence before the public listing to strengthen its financial strength after the re-financing.

OYO had filed preliminary documents with SEBI for its Rs 8,430 crore IPO in September 2021. But, at that time the stock market was quite unstable due to the Corona epidemic. In such a situation, the launch of the IPO was delayed. Due to this, the company had to agree to launch an IPO at a valuation of $4-6 billion, whereas earlier its intention was to launch an IPO at a valuation of $11 billion.