Oyo hits pause on IPO plans, aims to refile post $450M loan refinance
Oravel Stays Ltd, the parent company of travel and hospitality giant Oyo, has decided to put a temporary halt on its plans to go public by withdrawing its draft red herring prospectus (DRHP) from the Securities and Exchange Board of India (Sebi).
According to a filing with Sebi, the Softbank-backed firm withdrew its offer document on 17 May. This is the second time that Oyo has withdrawn its IPO application.
The company intends to resubmit its papers for the initial public offering (IPO) once it completes the refinancing of its $450 million loan, a process expected to be finalised by the next quarter, reported livemint.com.
The refinancing will be carried out through the issuance of dollar bonds, with JP Morgan likely to lead the process, the report mentioned. The estimated interest rate for these bonds stands at around 9-10% per annum.
Oravel Stays took steps to reduce its debt burden in November by prepaying a substantial portion of its outstanding debt through a buyback process amounting to Rs 1,620 crore.
Approximately 30% of its $660 million outstanding Term Loan B was repurchased during this buyback, effectively reducing the loan balance to about $450 million.
Founded by Ritesh Agarwal, Oyo initially filed its preliminary IPO documents with the markets regulator back in September 2021, aiming to raise Rs 8,430 crore through the offering, which included a secondary offering of Rs 1,340 crore.
However, Sebi returned the draft papers, requesting various updates before resubmission.
Oyo’s initial IPO application in 2021 was returned in January 2023, following which it made a revised filing for a considerably smaller IPO.
Originally proposing a $1.2 billion issue (approximately Rs 8,430 crore), its revised confidential filing aimed for an IPO that was 40-60% smaller.
SoftBank holds a 46% stake in Oyo, with chief executive Agarwal owning a 33% stake. Other notable investors include Lightspeed and Peak XV Partners. SoftBank was listed as a promoter during Oyo’s first draft IPO filing.