Oyo Plans to File DRHP for IPO by FY25 Q1
Oyo, a hospitality startup, is preparing to file its draft red herring prospectus (DRHP) for an initial public offering (IPO) by the end of the first quarter of the next financial year. This marks the company's third attempt to go public after two previously shelved attempts. The forthcoming IPO is connected to a restructuring of shareholding by founder Ritesh Agarwal.
Shareholder Restructuring and Investment
Early investors such as Lightspeed Venture Partners are looking to sell their stakes, while Peak XV Partners have already sold shares worth $80-90 million. New investors, primarily family offices, are interested in the IPO, aiming to invest now and benefit from the public offering. Founder Agarwal, SoftBank Group, and HNI family offices are expected to maintain key positions in the company's ownership structure. Agarwal and SoftBank together own over 75% of Oyo parent Oravel Stays.
Financial Performance and Valuation
Oyo has recently shown improved financial performance, posting its first-ever profit after tax of Rs 229 crore in FY24 and a profit of Rs 132 crore in the first quarter of FY25. This improved performance and recent fundraising efforts have contributed to a more positive outlook for the company. Oyo's valuation has fluctuated, reaching a peak of $9 billion in 2021, but is currently around $4 billion, which reflects a revival in sustainable operations. The company's latest public offering is likely to be less than $1 billion, and it is expected to command a premium based on the ongoing stake sale conversations at a valuation of nearly $4 billion.
Strategic Moves and Expansion
Oyo's expansion in India, Southeast Asia, and the US, along with strategic investments in Europe, has driven its recent performance. The acquisition of G6 Hospitality in the US is expected to be a significant earnings driver, projected to contribute over Rs 630 crore to EBITDA in its first year after integration. Oyo projects its overall EBITDA will surpass Rs 2,000 crore by FY26.
Other Relevant Information
Past IPO Attempts: Oyo first attempted to go public in 2021, but its application was returned in January 2023. A revised application for a smaller IPO was withdrawn in May of last year.
Market Context: Oyo's IPO plans align with other late-stage consumer internet firms like Zepto that are also considering public offerings. At least 20 startups are expected to tap public markets this year.
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