PE-backed Oyo targets $1.1b India IPO

It continues a trend of planned offerings by pre-profit start-ups previously treated with skepticism by Indian exchanges. The change in attitude is said to have been driven by a better understanding of business models and a desire to participate in a global technology boom that has been accentuated by COVID-19-enforced changes in consumption habits.

Food delivery platform Zomato was the first mover, raising INR93.7 billion earlier this year in what was India’s fifth-largest PE-backed IPO. Other companies that have filed to list include Paytm and Mobikwik, insurance portal PolicyBazaar, and online-offline cosmetics retailer Nykaa

Oyo, which has raised about $4 billion in private funding, including a pre-IPO round at a reported valuation of $9.6 billion, intends to sell INR70 billion in new equity and INR14.3 billion in shares held by existing investors. Vision Fund will account for almost all the secondary portion, with Grab, China Lodging Holdings, and Global Ivy Ventures also set to offload shares.

Vision Fund currently owns 46.6% of Oyo, while Ritesh Agarwal, the company’s founder and CEO, has 38.5%, including 24.9% via RA Hospitality Holdings. Vision Fund and RA Hospitality each contributed roughly half of a $1.5 billion Series F round for Oyo in early 2020.

Sequoia Capital India and Lightspeed Partners India hold 3.24% and 2.74%, respectively. They made partial exits by selling shares to Agarwal in 2019 at a valuation of approximately $10 billion

Sequoia Capital India and Lightspeed India Partners have made a partial exit from India-based online hospitality platform Oyo through a $2 billion round comprising primary and secondary shares. The round brings the company’s valuation to around $10 billion. That came eight months after the close of a Series E round at a valuation of $5 billion.

Other investors listed in the prospectus include ride-hailing and local services platforms Grab and Didi with 1.81% apiece, and Airbnb with 1.36%. Oyo has also received backing from the likes of DSG Consumer Partners, VentureNursery, Greenoaks Capital, and Microsoft.

Founded in 2012, Oyo describes itself as a technology platform empowering the large yet highly fragmented global hospitality ecosystem. The company brings individual hotels into its branded, ecosystem that includes a full-stack technology suite covering digital sign-up and onboarding, revenue management, daily business management, and direct-to-consumer booking apps.

As of March, Oyo had 157,344 storefronts across more than 35 jurisdictions listed on its platform. The Oyo app was the third most downloaded travel mobile app globally and ranked number one in Asia in 2020, according to Sensor Tower. There have been more than 100 million downloads to date. Oyo also has 9.2 million members who pay subscription fees for access to additional benefits.

India, Indonesia, Malaysia, and Europe are the company’s core growth markets. However, rapid international expansion efforts were followed by a retrenchment in 2020 due to mounting losses, opposition from hotel owners, and COVID-19 hitting the hospitality sector globally.

Oyo generated revenue and other income of INR41.6 billion for the 12 months ended March 2021, down from INR134.1 billion the previous year. The net loss narrowed from INR127.9 billion to INR39.3 billion.

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• Topics
• South Asia
• Southeast Asia
• IPO
• Technology
• India
• Softbank
• Grab
• Didi Chuxing
• Sequoia Capital
• Lightspeed Venture Partners
• TMT
• Travel