Oyo Hotels & Homes plan to scale back its IPO due to weak secondary market conditions and falling stock prices of new-age internet businesses, Oyo had intended to raise $1.2 billion in its draught IPO documents filed with the markets regulator.
They said Oyo may need to refile the DRHP if it reduces the primary offer, or new share issuance, by more than 20% and the offer for sale, where existing investors sell their shares to new investors, by more than 50%. Oyo intended to raise roughly $950 million through new share sales and the balance through OFS in its DRHP submitted in October last year. Sources say the Gurgaon-based business may have to revise its value. Oyo aimed for a $9-12 billion value but may settle with about $7 billion, they claimed. Microsoft invested $9.6 billion in Oyo last September. “They (Oyo) are anticipated to reduce the OFS component significantly, especially after the Paytm IPO when retail investors lost money and existing investors partially exited,” a source said. One97 Communications Paytm's parent company, listed for Rs 2,150, but its shares have lost nearly 50% since then. Paytm upped the amount of its IPO from Rs 8,300 crore to Rs 10,000 crore, with the OFS component. A lower OFS component for Oyo would imply SoftBank, a promoter in the business, would sell fewer shares than intended when the DRHP was filed.
SoftBank, Grab, China Lodging Holdings (HK) and Global IVY Ventures all participated in the secondary share offering. Other investors including Lightspeed Venture Partners, Sequoia Capital, and Airbnb aren't selling more shares.
Sequoia and Lightspeed gave founder Ritesh Agarwal a big piece of their holdings over two years ago, boosting his stake to one-third. SoftBank Group, led by Masayoshi Son, controls about 46% of Oyo, with Agarwal holding roughly 33%.
The DRHP indicated they will be promoters even after the IPO. Due to recent developments, Oyo is unlikely to trade this financial year.
Oyo, Delhivery, and PharmEasy were all scheduled to submit DRHPs this year. Sebi approved Delhivery's IPO plans last month, per ET. Changes to Oyo's IPO aspirations coincide with global and domestic corrections in technology company valuations in both public and private markets.