In the face of the current global crisis arising from the Russia-Ukraine war situation, as well as the beating tech stocks have taken in global and domestic markets, the much-anticipated $1.2 billion (Rs 8,340 crore) IPO of the hospitality unicorn may face a further listing delay as well as a reduction in offer size. According to sources familiar with the issue, the Ritesh Agarwal-led firm hasn’t made a final decision on its massive IPO ambitions, but big investors are closely monitoring the situation, and any plans to postpone the IPO cannot be ruled out. The IPO size could be reduced by a lesser Offer for Sale (OFS) component, which, according to OYO’s DRHP, amounts to Rs 1,430 crore (or 17% of the issue size).
According to sources, although the Softbank-backed firm was severely impacted by the COVID pandemic in global markets and India, the re-opening of markets and travel is one factor that has given investors confidence that the company will have better financials to show investors and the public.
“It is really a Catch-22 situation. They are expecting SEBI nod by April and watching the economic situations closely at home and in the other client geographical areas.” said a source.
OYO has been handed a detailed inquiry regarding the happenings. The corporation did not react to BT’s inquiries.
“The company will file its financials and it could reflect how much the company has been able to turn the tide post the COVID hit its business,” a source added.
Even the valuation issue is significant, especially since the business previously stated that it will stay to the $9.6 billion value it used for its last fundraise, as opposed to the reported $10-12 billion estimate. However, according to several sources, OYO’s forthcoming IPO valuation might be as high as $8 billion.
According to sources, in the light of the price correction Paytm and Zomato stocks have undergone in the domestic markets, the valuations of internet businesses, including OYO and another IPO-bound firm Ola, could witness a further drawdown.
At the same time, SoftBank, OYO’s major investor, is said to have taken a cautious approach this year after the public unicorn start-up suffered massive losses and the IPOs of one of its portfolio companies, logistics tech firm Delhivery, were delayed despite receiving regulatory approval in January.
“India’s largest IPO, LIC’s $8 billion public offerings, has also suffered delays looking at the macroeconomic conditions globally and the highly volatile markets. The delay in the IPOs of the smaller companies could also be because the LIC listing is not done yet and there couldn’t be enough liquidity in the market,” said an anonymous analyst at a stock brokerage firm.