OYO, the hospitality major, has filed its draft red herring prospectus (DRHP) through the confidential pre-filing route with a reduced IPO size of $400-$600 Mn. The company plans to raise the funds through the issuance of fresh shares to repay its debt. OYO is expected to receive SEBI approval and is eyeing a public listing around Diwali. The confidential pre-filing route allows companies to have more flexibility on issue size during the initial stages and allows them to change the primary issue size by 50% until an updated DRHP is filed with the regulator. OYO’s current investors are unlikely to sell their shares in the IPO. OYO’s situation has considerably improved, and it claimed to have achieved its first EBITDA positive quarter in Q1 FY23. The homegrown hotel booking segment is estimated to surge to a market size of $7.6 Bn by the end of 2023.
Indeed, OYO’s strong position in the hospitality segment, coupled with the projected growth of the homegrown hotel booking segment, may work in its favor as it moves forward with its IPO plans. While many other Indian tech startups have decided to postpone or withdraw their IPO plans due to the global economic slowdown, OYO’s decision to take the confidential pre-filing route and reduce its IPO size may give it more flexibility and room to adapt to market conditions. Ultimately, the success of OYO’s IPO will depend on a variety of factors, including investor sentiment, market conditions, and the company’s financial performance leading up to the listing.