Oyo Scraps IPO Plans: Deep dive to know more
Oyo Scraps IPO Plans: A Shift to Oyo’s Private Placement Strategy
Oyo has withdrawn its IPO papers for the second time in three years, signaling a strategic shift as Oyo scraps IPO plans in favor of a private placement. The source indicated that Oyo’s IPO refinancing will necessitate significant revisions to its financial statements, requiring a new filing with the regulator as per current regulations.
Regulatory Filings and Reasons for IPO Withdrawal
Regulatory filings reveal that Oyo, a budget hotel aggregator backed by Softbank, withdrew its IPO papers on May 17. This move marks the second instance where Oyo scraps IPO plans. The specific reasons for the withdrawal remain undisclosed on the SEC’s website.
Refinancing Strategy and Future Funding
In light of the recent developments where Oyo scraps IPO plans, the company declined to comment. However, a knowledgeable source informed Reuters that Oyo is close to finalizing a refinancing deal, aiming to raise between US$350 million and US$450 million through bonds.
“The refinancing will lead to material changes in Oyo’s financial statements. Consequently, it will need to update its filings with the regulator,” the source explained.
Impact of Early Refinancing on the IPO Process: IPO News
Given the early stage at which the refinancing decision was made, it was deemed unnecessary to continue pursuing IPO approval with outdated financials. Oyo scraps IPO plans temporarily and will submit new documents post bond issuance, added the source, without specifying a timeline.
Historical IPO Attempts and Current Valuation Efforts
Oyo initially sought to go public in 2021, targeting a US$12 billion valuation. In March 2022, it discreetly refiled with the Securities and Exchange Board of India (SEBI), indicating a renewed attempt at an IPO. However, with the recent decision where Oyo scraps IPO plans, the company is now exploring capital infusion from private investors at a reduced valuation of US$3 billion to US$4 billion to alleviate its debt.
Founder’s Vision Amidst Organizational Changes
The company’s founder and CEO’s recent statement reflects on the journey since Oyo’s inception in 2013. Despite the challenging decision where Oyo scraps IPO plans, the hotel aggregator has made tough choices, including job cuts and executive reshuffles, to manage its financial obligations.
In conclusion, Oyo withdraws its IPO ambitions, opting for private refinancing to reshape its financial landscape and reduce debt, while redirecting to the challenges of the hospitality sector.
