Hospitality and travel-tech firm OYO is looking to launch its initial public offer after September and has written to stock market regulator Sebi, seeking to file updated and restated consolidated financial information.
The company, which had filed preliminary papers with Sebi to raise Rs 8,430 crore through an initial share sale in October last year, is now prepared to settle for a lower valuation of around $7-8 billion against the $11 billion it was targeting initially, according to people in the know of the development.
OYO's move to launch the IPO after the September quarter is mainly driven by the expectation of improvement in its financial performance and the current volatile nature of the market, they said.
It is understood that in a letter to Sebi, Oravel Stays Ltd, which runs OYO, has sought permission to include restated financial statements for the six-month periods ending September 30, 2022, September 30, 2021, and September 30, 2020.
"Price swings in a newly listed stock create concern among the public.
"Amongst such sentiments, it will be best to be able to first show to the investors that the business revival is real, it is strong and is leading to much higher bookings and perhaps, the first sign of a positive bottom line.
"Hence, OYO will likely wait for a quarter," said a person aware of the company's plans.
When reached out for comments, OYO declined to comment.
As per the company's DRHP (draft red herring prospectus), OYO had incurred a Rs 1,744.7 crore loss in FY21.
The company's proposed IPO comprised a fresh issue of equity shares aggregating up to Rs 7,000 crore and an offer for sale to the tune of Rs 1,430 crore, as per its DRHP.
However, it has been reported that OYO now wants to go ahead only with the Rs 7,000 crore primary issue, doing away with the Rs 1,430 crore offer for sale (OFS) component, and has reached out to Sebi for approval.
An OFS allows promoters of a company to sell their shares to the public through the stock exchange.
OYO's OFS would have seen its largest investor Softbank Group selling around 2 per cent of its stake and other investors Grab Holdings, Huazhu Hotels and the family office of Sunil Munjal of the Hero Group diluting their stakes as well.
Also, when OYO goes for listing in the markets, it will settle for a more reasonable valuation of around $7-8 billion, below the $11 billion it was targeting initially, considering how the stock markets have changed in the past few months, said a source.
When the company filed its DRHP with Sebi in October 2021, the markets were buoyant and IPOs were getting high valuations and oversubscription with both global and domestic capital flowing into the stock market.
However, the scenario has altered since then, with geopolitical unrest, rising inflation and interest rate hike cycle.
In August 2021, when OYO raised $5 million from Microsoft, it was valued at $9.6 billion.