SoftBank-backed Oyo to shelve plans for IPO in ‘22

Bloomberg

Oyo Hotels, the once high-flying Indian startup, is shelving plans for an initial public offering in 2022 after a market downturn that would hurt its valuation, according to people familiar with the matter.
The board of Oyo, formally known as Oravel Stays Ltd, talked through a change in the offering’s timing during multiple meetings after consulting with its bankers and investors, said the people, asking not to be identified because the decisions aren’t yet public. If the company picks up the process again by year end, the earliest possibility for an IPO would be in 2023, they said.
The Gurgaon-headquartered company, which filed preliminary IPO documents last year, is seeking regulatory permission to update its draft prospectus with fresh financial information after the close of the September quarter, said the people. Its bankers, led by Kotak Investment Banking, have filed the request with the Securities and Exchange Board of India, the people said.
The decision could make Oyo’s IPO a high-profile casualty from a global downturn in the technology industry. With inflation fears rising, lingering Covid-19 infections and the war in Ukraine, investors have roiled markets and pulled back from risky investments. The tech-heavy Nasdaq index has tumbled 26% this year. “This isn’t the best of times for any IPO,” said Ashutosh Sharma, head of research, Forrester Research Inc. “Why Oyo, any startup anywhere in the world looking to raise money through IPO, VC funding or PE placement or any other channel, won’t get the best valuation.”
An IPO delay would also mark another setback for Oyo and founder once celebrated for their vision of changing the hotel and lodging industry by backers like SoftBank Group Corp founder Masayoshi Son. SoftBank holds about 47% stake in the startup, while the 28-year-old chief executive officer owns about one third.
Oyo has yet to hear back from the securities regulator on its request, but indications are that it will get a response either late this week or next week, said one of the people. Oyo filed its preliminary document, the so-called Draft Red Herring Prospectus or DRHP, for a $1.1 billion IPO in September last year, and about eight months have since lapsed without the IPO being cleared.
If it gets a green light from the regulator, the startup will seek to file as an addendum five or six pages of financials for the fiscal year that ended in March, as well as for the six months through September.