Oyo Hotels may file draft red herring prospectus next week for $1 billion IPO

Budget hospitality chain Oyo Hotels and Homes is planning to raise around $1 billion through an initial public offering (IPO) and is expected to file its draft red herring prospectus (DRHP) next week, banking sources told ET.

The IPO, tentatively pegged at between $1 billion and $1.2 billion, will consist of a fresh issue of shares and an offer for sale (OFS) from existing shareholders, the sources said. The SoftBank-backed firm has appointed Kotak Mahindra Capital, JP Morgan and Citigroup to manage the public issue.

"The IPO papers are ready, and bankers are waiting for final approval from the company before filing it with the Securities and Exchange Board of India (Sebi)," said one of the people. "Most probably, the DRHP will be filed before September 30," the person added.


Oyo did not respond to ET's queries seeking comment.

Oyo is the seventh Indian tech unicorn to have either tapped or plan to hit the primary market after Zomato, CarTrade Tech, Paytm, PolicyBazaar, Nykaa, and Mobikwik.

While Zomato and CarTrade Tech successfully completed their IPOs in July and August, respectively, the others have filed their draft prospectuses with the capital markets regulator.

The IPOs of PolicyBazaar and Nykaa are expected in the first half of October.

Last week, shareholders of Oravel Stays, the parent company of Oyo, approved its conversion to a public limited company from a private limited firm.

The company also increased its authorised share capital to ₹901 crore early this month from ₹1.17 crore. Oyo has expanded its paid-up share capital through a stock split and bonus issue.

The stock's face value has been split into a 1:10 ratio for all equity and preference shares.

The company has also allotted 3,999 bonus shares for each share held. For preference shareholders, the conversion ratio to equity shares has been changed to 1:4,000 from 1:1 earlier.

The bonus allotment was made to 15 equity shareholders, including founder Ritesh Agarwal, Japan's SoftBank, Lightspeed Venture Partners, Microsoft Corp, Oravel Employee Welfare Trust and Sequoia Capital.

Microsoft recently invested $5 million in the hotel firm, giving Oyo a valuation of nearly $9.6 billion.

Oyo, which is also backed by investors such as Airbnb and Grab, operates in 35 countries, with India, Europe, and Southeast Asia being its key markets.

The company told ET last month that it is witnessing stronger recovery in Europe on the back of higher vaccination rates and that this would also be reflected in India once more people are vaccinated.

Currently, 43% of Oyo's revenue comes from India and Southeast Asia, while 28% is from Europe and other global markets.