SoftBank-backed Oyo is all set to file a updated draft document with the markets regulator Securities and Exchange Board of India (SEBI) as it moves ahead with its $1.2 billion initial public offering (IPO), according to sources privy to the development.
The company has already received in-principle approval from BSE as well as the National Stock Exchange, the sources added.
Oyo’s move to file a revised prospectus comes amid questions on whether it will be able to go ahead with a listing in the current environment. Stocks of loss-making internet companies have seen intense selling pressure in India and the US as investors turn cautious.
Shares of restaurant aggregator Zomato plunged to its lowest level since its blockbuster listing last year, with digital payments company Paytm, online beauty and wellness firm Nykaa and PB Fintech, an online insurance and lending platform, also coming under pressure.
The selling in shares of internet companies like Zomato, Paytm, and PolicyBazaar has been triggered by the surge in global and domestic bond yields that has made their valuations richer than what their fundamentals dictate.
Oyo filed its draft red herring prospectus (DRHP) in September last year and has been in the process of responding to questions and clarifications sought by regulators.
Last year, Moneycontrol reported that Zo Rooms, besides hotels association Federation of Hotel and Restaurant Associations of India (FHRAI), had filed complaints against Oyo with SEBI asking the markets regulator not to approve the company’s IPO.
Zo Rooms, which is engaged in a court battle with Oyo over a failed merger, opposed the IPO on the grounds that it violated International Centre for Dispute Resolution regulations and alleging that the company had misrepresented facts about their litigation issue in the DRHP.
FHRAI also came out strongly against Oyo alleging that the company have made a “misrepresentation” in its DRHP by claiming to not have any outstanding criminal proceedings against it.
According to sources, SEBI is close to making a ruling and the last rounds of observations are expected in about 10 days. Thereafter the company is expected to file the updated draft prospectus in line with the final observations.
Given the environment, there’s a likelihood that the company may be looking at reprising its valuation of around $9 billion in a sign that the markets are repricing new economy consumer tech firms to more sensible levels. Moneycontrol had earlier reported that it was targeting a valuation of around $12-14 billion.
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