Oravel Stays (OYO) Files for Rs.8,430 Crore IPO
Ritesh Agarwal is already India’s youngest self-made dollar billionaire at the age of 27. But he has bigger plans to take the company public. Oravel Stays, the company that operates OYO Rooms, has filed the draft red herring prospectus (DRHP) with SEBI for its proposed Rs.8,430 crore IPO. That is roughly equivalent to $1.2 billion at current rates.
OYO has already emerged as the leading travel and stay syndicator in India and is largely built on the lines of Airbnb of the United States. OYO is already among the leading Unicorns in India (digital plays valued at above $1 billion) and the current IPO is expected to value OYO at $12 billion enterprise value. That is 25% higher than the last round of funding.
If the OYO IPO goes through at the proposed valuations, it will be among the handful of Indian digital start-ups to secure valuations in excess of $10 billion. Some of the other members in the list include Byju’s, Flipkart, Paytm, Zomato etc. OYO wants to ride the huge success of the Zomato IPO in July, where the massive Rs.9,375 crore IPO was subscribed more than 38 times, with bulk of the demand coming from institutional investors.
Check:- OYO IPO: 12 things to know about one of the most keenly awaited IPOs
The proposed IPO of OYO will consist of a fresh issue of Rs.7,000 crore and an offer for sale (OFS) of Rs.1,430 crore. Interestingly, neither the promoter, Ritesh Agarwal, nor the key early investors in OYO (like Lightspeed Ventures, Sequoia, Microsoft and HT Media) plan to divest their stake via the OFS.
The fresh issue of Rs.7,000 crore will be used by OYO to repay some of its debt and also to bankroll some of its organic and inorganic expansion plans. Out of the total fresh funds raised, OYO will use Rs.2,441 crore for repayment or for prepayment of debts. Another Rs.2,900 crore will be used for expansion. OYO plans to aggressively expand its presence across India, Malaysia, Indonesia and Europe.
The OYO app has over 100 million downloads as of date and it is still growing. For FY21, the total revenues of OYO was 70% lower at Rs.4,157 crore, but that was understandable due to a sharp fall in tourism and travel. Post restructuring, OYO has improved its gross margins 3-fold to 33.2%.
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