OYO guns for $1.2bn IPO, hires merchant bankers

SoftBank-backed hospitality chain, OYO Hotels and Homes, is looking to raise $1.2 billion through an initial public offering (IPO), confirmed two people aware of the development.

The company has hired three investment banks for the same, confirmed the people cited above.

OYO’s proposed IPO will be a mix of primary issuance and secondary transactions with 10 investors looking to partially exit the company said the sources.

While the company has not decided whether it will list on the public markets in India or elsewhere, it has appointed investment banks JP Morgan, Kotak Mahindra Capital and Citi, the persons said on condition of anonymity.   Other banks will join the consortium, one of the persons added.   

Financial news website MoneyControl was the first to report the story on Monday. 

While JP Morgan and Citi declined to comment, Kotak did not respond to the queries till the time of publishing the story. OYO spokesperson declined to comment on the development as well.

Founded in 2013, OYO is backed by investors such as SoftBank Group Corp, Lightspeed Venture Partners, Hero Enterprises, Sequoia Capital India, AirBnB, Grab Holdings and Artha Venture Services. Hindustan Media Ventures, which is controlled by HT Media Ltd, invested Rs 54 crore in the hospitality firm in January 2021. HT Media owns Mosaic Media Ventures which publishes  TechCircle and VCCircle.

This development comes soon after OYO raised $660 million in debt from global institutional investors including Fidelity Investments in July, to settle past debts and invest in product and technology. The company has also been in the news for claims worth Rs 160 crore submitted to the National Company Law Appellate Tribunal (NCLAT) by hotel owners in April. 

On 30 June, Reuters reported that Microsoft Corp. "is in advanced talks to invest in Softbank-backed OYO Hotels and Homes for an undisclosed amount, valuing the hospitality company at around $9 billion". 

Both OYO or Microsoft had declined to comment on the report.   

OYO works with over 100,000 small hotels and homeowners across 80 countries including India, US, UK, Europe, Southeast Asia and the Middle East. The company laid off nearly 300 employees in 2020 due to the impact of the pandemic on the travel and hospitality sector.   

The travel hospitality segment is attracting investor interest despite the ongoing pandemic. In recent transactions in this space, travel and hotel booking service provider ixigo raised Rs 270.3 crore (about $36.5 million) from the likes of Singapore sovereign wealth fund GIC and Info Edge Venture Fund last month in the run up to its IPO.