OYO IPO: OYO gears up to file for $1.2 billion IPO

According to sources, the seven-year-old startup, founded by 27-year-old Ritesh Agarwal, Oyo Hotels & Homes, a SoftBank Group-backed Indian hospitality company, will file for an initial public offering (IPO) next week to raise approximately $1 billion. 

The hotel aggregator plans to list in Mumbai, and its IPO is expected to be worth between $1 billion and $1.2 billion, according to the source. In addition to this, the initial share offering would include a new issuance of shares as well as an offer for sale from existing owners.

OYO: Current Scenario 

To mention a few, OYO’s investors are SoftBank, Sequoia, Lightspeed Venture Partners, Hero Corporate, Microsoft, Grab, and Airbnb. 

The company was recently valued at $9.6 billion, had $780 million to $800 million in the bank three months ago (according to Agarwal’s public statement), and raised $660 million in debt in July.

During the global health crisis, Oyo, in which SoftBank has a 46 percent investment and is one of its biggest bets, has faced months of layoffs, cost-cutting, and losses.

Kotak Mahindra Capital, JP Morgan, and Citi are the bankers advising Oyo on the IPO.

Oyo is present in over a dozen nations. The startup, one of the most valued in the South Asian country, has created a type of operating system to assist hoteliers in accepting digital bookings and payments. Oyo’s technological stack assists hotels in determining the ideal pricing for a room. As well as in discoverability and interfaces with third-party hotel booking platforms like booking.com and MakeMyTrip.

Like most companies in the travel and hospitality industry, OYO was severely impacted by the epidemic but has recovered significantly in recent months.

Today, the majority of the startup’s income comes from a few regions, like India, Malaysia, Indonesia, and Europe, which have removed their lockdown rules as more people become vaccinated.

The Future for OYO

The company, which has already been recovering from the pandemic, has totally altered its strategy to revenue sharing from the previous one, in which it would pay hotel partners a minimum guarantee to operate with OYO. 

It is also strongly focused on technology, having recently established a collaboration with global tech titan Microsoft to offer smart room experiences for tourists, including personalized in-room activities.

This would involve an investment of around $5 million from Microsoft in the company.

The firm has also developed a self-registration option, allowing hotel owners to go online on the platform in 30 minutes. The move is anticipated to increase the number of hotels on the platform, which has seen a significant decrease as a result of the pandemic.

In addition to this, OYO has been aiming to expand its range of hospitality-related technological solutions. Their technology stack includes apps like OYO, OYO OS, Co-OYO to name a few. Most of these apps are powered by AI and machine learning. Not just this, chatbots and apps for personalized recommendations and performance management are also introduced.

Wrapping up

Oyo, like Zomato and a few other companies, like Nykaa, Ola, Paytm, and PolicyBazaar, intends to list on Indian stock exchanges. The Oyo IPO is likely to be worth $1.2 billion or roughly around Rs. 8,000 crores. It is reported that the company plans to file for it anytime around next week. Will OYO be able to deliver the hottest IPO of the year?