What is the size of the OYO IPO and when is it likely to hit the primary markets?

The founder and CEO of Oravel Stays, the holding company of OYO, is planning a public issue of nearly $1.2 billion. According to Ritesh Agarwal, the online hotel booking company which syndicates rooms through a digital AI-driven model, The IPO will value the overall company at around $12 billion. This would position OY among India’s priciest Unicorns, along with other big names like Byju’s, Flipkart, Paytm, Zomato etc.

OYO has already filed the draft red herring prospectus or DRHP for its proposed Rs.8,430 crore or $1.2 billion IPO with SEBI. This would be nearly 25% higher than the indicative valuation that OYO got in July this year, when it raised funds from Microsoft. Out of the total issue size, the fresh issue will be Rs.7,000 crore while the OFS will be Rs.1,430 crore. Incidentally, neither Ritesh Agarwal nor other early investors plan to take an exit in OFS.

Agarwal, the promoter of the group, had increased his stake in the company to 30% in 2019 by buying shares from some of the early investors like Lightspeed and Sequoia India. Oyo will use the net proceeds of the fresh issue to repay the debt of some of its subsidiaries as well as to fund its organic and inorganic growth plans. OYO improved its gross profit margin from 9.7% to 33.2% in the previous year and an 80% reduction in EBITDA losses.