Oyo pulls back IPO documents, plans to resubmit after restructuring $450 million debt

Oravel Stays Ltd, the parent company of travel and hospitality group Oyo, has decided to temporarily delist its listings by withdrawing its draft red herring prospectus (DRHP) from the Securities and Exchange Commission. Exchange Board of India (Sebi).

The Softbank-backed company withdrew its offer letter on May 17, according to a filing with Sebi. This is the second time Oyo has abandoned its IPO bid.

The company plans to resubmit its initial public offering (IPO) once it finishes paying off its 450 million USD loan, a process expected to be completed by next quarter.

The recapitalization will be accomplished through the issuance of bonds, with JP Morgan likely to lead the process, the report said. The expected interest rate for these bonds is around 9-10% per annum.

Oravel Stays took steps to reduce its debt load in November by prepaying a large portion of its outstanding debt through a share buyback process worth Rs 1,620 crore.

About 30% of its 660 million USD in outstanding loan B was redeemed in this purchase, effectively reducing the loan balance to about 450 million USD.

Ritesh Agarwal-founded Oyo had initially filed its pre-IPO documents with the market regulator back in September 2021, aiming to raise Rs 8,430 crore through an offer that included a secondary offer of Rs 1,340 crore.

However, Sebi returned the draft documents and requested various updates before resubmitting.

Oyo's original IPO filing in 2021 was withdrawn in January 2023, after which it filed a revised filing for a significantly smaller IPO.

The original proposal was for a 1.2 billion USD issue, but the updated confidential filing aimed for an IPO that was 40-60% reduced in size.

SoftBank has a 46% ownership in Oyo, with CEO Agarwal owning 33%. Lightspeed and Peak XV Partners are also noteworthy investors. SoftBank was identified as a supporter in Oyo's initial IPO draft filing.

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