Hospitality firm OYO Rooms has filed a draft red herring prospectus (DRHP) with market regulator SEBI to raise Rs 8,430 crore by floating an initial public offering (IPO). With that, SoftBank-backed OYO became the first hospitality company in India to seek a market listing since 2019.
The IPO by Oravel Stays - the parent company of OYO Hotels & Homes - will comprise fresh issuance of shares worth Rs 7,000 crore and an offer for sale of shares worth Rs 1,430 crore.
The company plans to use the proceeds from the issue towards repaying borrowings of about Rs 2,441 crore by OYO's subsidiaries, funding its growth initiatives amounting to Rs 2,900 crore, and for general corporate purposes, according to the DHRP.
Existing shareholders SVF India Holdings, A1 Holdings, China Lodging Holdings and Global Ivy Ventures will offer shares under the OFS portion. Besides, the Softbank Vision Fund, Singapore ride-hailing company Grab, and Global Ivy Ventures will be participating in the OFS.
OYO's total income in FY21 declined 69 percent to Rs 4,157 crore due to the fallout from the pandemic.
In 2021 so far, the company's revenue is down 48 percent year-on-year at Rs 3,385 crore. It has managed to reduce its loss to Rs 4,000 crore from Rs 13,123 crore in the year-ago period. Its borrowings have risen 13 percent to Rs Rs 3,165 crore.
OYO Rooms has incurred net losses each year since its incorporation and said its ability to achieve profitability may be delayed.
"A prolonged economic impact from the COVID-19 pandemic is expected to continue to have a material adverse impact on our revenue and financial results," according to OYO's preliminary papers filed with the regulator.
"While we have enacted measures to reduce our expenses, we have
utilized a significant portion of our cash to support our operations in Fiscal 2021 due to the material decrease in accommodation bookings and revenue as compared to Fiscal 2019, prior to the COVID-19 outbreak," it said.
The filing of IPO papers by Oyo comes at a time when startups are hitting the primary market to raise capital. In July, While Zomato and CarTrade have made strong debuts on Dalal Street, Paytm, PolicyBazaar, Nykaa and Mobikwik have filed their papers to float IPOs.
Euphoria in the primary market seems to be returning on Dalal Street. Earlier on Friday, Paras Defence made a stellar debut after its IPO last week was subscribed more than 300 times.