Hospitality chain Oyo’s initial public offering (IPO) is likely to be delayed by three months as India’s capital markets regulator has asked the Ritesh Agarwal-promoted startup to update its draft IPO papers, The Economic Times has reported.
Oravel Stays (Oyo) has been requested by the Securities and Exchange Board of India (Sebi) to update risk factors, its key performance indicators (KPIs), pending lawsuits, and the basis for valuation in the company's draft red herring prospectus (DRHP), the report said citing people familiar with the matter.
The IPO was supposed to be launched in the first half of 2023.
Moneycontrol could not independently verify the report.
However, the chance to update any pertinent information is a "welcome" step, a source familiar with the company's plans stated, reported ET. “It would only be prudent to expect investors to put in money on the basis of the latest information, and we have been asked to provide the latest disclosures at the appropriate pre-IPO stage. This is the most sensible course of action now,” the person said. “It may also shift the IPO plans by two-three months, but we will be able to show a full financial year of Ebitda profits in the process.”
Oyo most recently provided Sebi with financial data for the first half of FY23 via a supplement to the DRHP. It informed the regulator that prospective investors needed to be made aware of the significant improvement in business performance since its September 2021 IPO application.
Sebi has now requested that the company update additional material information.
According to the report a source familiar with the situation said Sebi wrote to Oyo stating that the current DRHP's disclosures do not take into account the important updates and disclosures that result from financial statements filed as addenda that have since been updated. This has led to a revised period for disclosures, which in turn necessitates significant updates to the DRHP's sections on risk factors, the basis of the offer price, pending lawsuits, and other pertinent sections.