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Considering the last implied valuation at $9.6 billion for the company at the time of Microsoft's investment in September this year, the total number of shares being estimated at around 6.4 billion as per the DRHP figures, and the average cost of acquisition per equity share mentioned in the draft red herring prospectus (DRHP), entities such as SoftBank's SVF India Holdings (Cayman) Limited, A1 Holdings Inc, China Lodging Holdings (HK) Limited and Global Ivy Ventures LLP are likely to see their returns going up by 213%, 72%, 770% and 515%, respectively.
Oyo intends to raise Rs 8,430 crore via primary issue.
Oyo’s early investors such as Lightspeed Ventures and Sequoia, along with recent ones like Airbnb, Microsoft, Hindustan Media Ventures, and founder Ritesh Agarwal will not be selling any shares. Softbank, one of the largest shareholders, will offload about 2% of its existing stake through the initial public offering.
As per the company’s DRHP, the average cost of acquisition per equity share for SoftBank's SVF India Holdings is Rs 34.81, while for A1 Holdings Inc, China Lodging Holdings and Global Ivy Ventures, the average cost of acquisition per equity share is Rs 63.52, Rs 12.53, and Rs 17.73, respectively.
SVF India Holdings holds 2,965,840,000 equity shares on a fully diluted basis, while A1 Holdings holds 115,240,000 shares. China Lodging Holdings and Global Ivy Ventures hold 51,640,000 shares and 59,640,000 shares, respectively.
As per its DRHP, Oyo intends to use the IPO proceeds for the pre-payment or repayment of certain borrowings availed by its subsidiaries, funding organic and inorganic growth opportunities and for general corporate purposes. Its euphoric valuations are leading to promising paper gains for investors for now, but the sustenance is yet to determined.
In a tweet on Wednesday, Oyo's founder Ritesh Agarwal thanked @PMOIndia for organising the ideas exchange session with India Inc representatives. "It was energizing listening to PM's vision of podium finish for India. I truly believe that Indian startups will lead in this endeavour as they have demonstrated this year. When the government launched Startup India in 2016, India had 11 unicorns. Now with 79 unicorns of which 42 emerged just this year, we have a real opportunity for startups to lead the next wave of economic growth for our country," he wrote on Twitter.
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Oyo had faced some hiccups post filing its DRHP. Following Oyo's DRHP, Zostel had sent a letter to the markets regulator which called for rejecting Oyo’s draft prospectus and suspending its IPO. Zostel had said Oyo’s IPO was ‘non-maintainable’ as the company's capital structure was not ‘final.’ Oyo had hit back at Zostel with a letter and had updated Sebi on the matter.
In its letter to Zostel, which was also sent to Sebi, Oyo had written that no restriction had been imposed on the company from changing its shareholding pattern either by the Supreme Court appointed arbitrator’s award in the matter or by the Delhi High Court. “Further, no stay has been granted by the Delhi High Court on the proposed offer despite a prayer to this effect by Zostel,” Oyo wrote.
Industry body Federation of Hotel & Restaurant Associations of India (FHRAI) also approached Sebi last week alleging non-disclosure of investigation by the Directorate General of GST Investigation. An Oyo spokesperson strongly denied these allegations. "There is no tax evasion by the company. Till date, there is no tax demand against the company. We have encouraged better tax compliance for our hotel partners. Any hotel being onboarded with Oyo has to follow formal processes, maintain paperwork and adhere to regulatory requirements," an Oyo spokesperson had said.
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