IPO-bound OYO to refile DRHP with updates to Sebi by mid-February

Market regulator asked hospitality company to submit application again, give information on risk factors and litigation

SoftBank-backed hospitality firm OYO said on Wednesday it will refile its Draft Red Herring Prospectus (DRHP) with the stock market regulator by the middle of February this year.

The Securities and Exchange Board of India (Sebi) early in January asked the firm earlier to refile its public listing application with updates and revisions, including sections such as risk factors, outstanding litigation and Basis for Offer. To this, the company had said refiling the document could take up to 2-3 months.

OYO did not give an estimate of the time it expects Sebi to take for approval once the DRHP is filed. However, a source familiar with the matter said that the company hopes to get the approval by April.

A Sebi letter had said that the disclosures in the firm’s present DRHP “do not take into account the material changes/disclosures arising from Updated financial statements as filed through addendums leading to revised period for disclosures which in turn leads to necessities to make material updates in Risk Factors, Basis of Offer Price, Outstanding Litigations and update other relevant sections of DRHP.”

“We are working on updating all key sections simultaneously. Responsibilities have been divided among different teams, with senior company leaders driving the collaboration with the Book Running Lead Managers, essentially the IPO bankers, the lawyers and the auditors. We are keen on refiling the DRHP by middle of Feb 2023, if not earlier,” said an OYO spokesperson.

The Gurugram-based firm filed preliminary papers for a Rs 8,430 crore ($1.2 billion) IPO back in September of 2021, looking for a valuation of $11-12 billion.

OYO recently submitted—through an addendum to the DRHP—its financial numbers to Sebi for the first half of FY23. The firm had reported its maiden positive adjusted EBITDA of Rs 63 crore, a 24 per cent year-on-year increase in revenue and 69 per cent increase in monthly booking value (GBV per month) for its hotels in the first 6 months of FY23. The regulator has now asked the company to also update other material information.

Sebi’s move seems to be in line with its expectation of higher levels of transparency in the IPO process, said a source. Lately, it has asked companies to share additional KPI’s and the basis for pricing of IPO’s. In its meeting with bankers in December 2022, it also shared steps it is taking to reduce the IPO processing time.