Hospitality major Oyo plans to refile IPO willing to raise $450 million

OYO, supported by Softbank, is preparing to resubmit its much-awaited initial public offering (IPO) as the top player in global travel technology nears the finalization of refinancing strategies to raise as much as  $450 million by issuing dollar bonds, according to PTI's news report based on insider information.

According to a news article from PT, it is highly probable that JP Morgan will assume the role of the primary banker for the refinancing process by issuing dollar bonds with an anticipated annual interest rate ranging from 9 to 10%. The article cites a reliable source for this information.

OYO has already filed an application with SEBI, the markets regulator, to retract its existing draft red herring prospectus (DRHP) prior to refinancing. After the bond offering, the company intends to submit a revised edition of the DRHP, as reported by PTI.

Oravel Stays Ltd, the parent company of OYO, recently made a substantial payment towards its debt in November by repurchasing a significant portion through a buyback process. The total amount prepaid was Rs.1,620 crore, with 30% of its outstanding Term Loan B of USD 660 million being repurchased. This buyback has resulted in a reduction of the loan's outstanding balance to approximately USD 450 million, as reported by PTI.

According to an individual familiar with the company's IPO prospects, OYO's financial records will undergo significant modifications due to this refinancing. As a result, the company will need to update its regulatory filings to comply with the current requirements.

The PTI source argues that seeking IPO approval based on the current financial situation is illogical, given the progress made in the refinancing decision. As such, it is advisable to retract the current application.

OYO filed preliminary documents with the Securities and Exchange Board of India (Sebi) in September 2021, seeking an initial public offering (IPO) worth Rs.8,430 crore. However, due to the unstable market conditions during that period, the company had to adjust its expectations and prepare for a lower valuation of $4-6 billion instead of the initially anticipated $11 billion. As a result, the IPO faced delays.