Orawell Stages Pvt. Ltd. has filed paperwork for a ₹8,430 crore initial public offering, which is expected to value at least $10 billion to the operator of hospitality unicorn OYO Hotels & Homes.
Some of its investors, including Japan’s SoftBank Group, will sell a portion of their stake in the initial share sale. The issue will involve a primary capital increase of approx. ₹7,000 crore more stake sale by investors ₹ 1,430 crores.
SoftBank Group is selling shares of value ₹1,328.53 crore, while Grab, which invested $100 million in Oyo in 2018, is selling shares of approx. ₹51.6 crores. Huazhu Hotels, which invested in 2017, is selling shares of approx. ₹23.13 crores. The family firm of Hero Group’s Sunil Munjal is also selling shares of ₹26.71 crores.
Oyo’s 27-year-old founder Ritesh Agarwal will not sell his shares. Apart from this, Sequoia Capital and Lightspeed Ventures are also not selling shares in the IPO.
The filing of the capital markets regulator is the latest example of Indian unicorn startups including Paytm, Nykaa, Exigo and PolicyBazaar in a rush to tap the public markets amid huge rally in the stock market.
Bankers to the issue include Kotak Mahindra Capital, Citigroup, JP Morgan, ICICI Securities, Nomura, JM Financial and Deutsche Bank. At present, the founder Agarwal holds 8.21% stake, while an affiliated promoter firm, RA Hospitality Holdings Cayman, holds 24.94%.
In 2019, Agarwal bought back a portion of the shares from investors Sequoia Capital and Lightspeed Ventures through RA Hospitality Holdings.
Currently, SoftBank Group holds 46.62%, Grab 1.81%, Huazhu Hotels 0.81% and Munjal family 0.04%.
proceeds from value issue ₹2,441 crore will be used by its subsidiaries Orawell Stays Singapore Pte Ltd, Orawell Hotels LLC and OYO Hospitality Netherlands BV and OYO Singapore and OHL to pay off the outstanding debt.
As of July, the total outstanding borrowings with the firm was ₹4,890.56 crore on a consolidated basis.
For the fiscal year 2021, its total income increased to ₹4,157.39 crore from ₹1,3413.27 crore in the previous year. net loss limited ₹4,102.28 crore to ₹11,079.79 crores.
Prior to its filing, Orawell expanded its share capital to ₹1.17 Cr to ₹901 crore earlier this month.
Meanwhile, OYO is also fighting a legal battle against Zostel Hospitality Pvt Ltd. Ltd., which runs Zoe Rooms.
Zostel has approached the Delhi High Court to restrain Oyo from changing its capital structure through an IPO.
Earlier, Zostel had won an arbitration order that required Oyo to hand over 7% equity in the company.
The company has also inducted Olympian Deepa Malik on its board as an independent director.
Other board members include Agarwal; Bejul Somaiya, founder of Lightspeed Venture Partners; Aditya Ghosh, former chief executive of OYO in India and South Asia; Matthew Elstead, the former chief operating officer of Starbucks Troy, and William Steve Albrecht, the former chief executive officer of the American Accounting Association, according to a draft of its IPO papers.
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