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    Oyo pre-files confidentially for smaller IPO

    Synopsis

    Pre-filing, introduced by the Securities and Exchange Board of India in November last year, allows the details of the preliminary filing to be kept confidential, unlike in the normal filing where the DRHP becomes a public document. This option provides companies greater flexibility on the issue size during the initial stage, and they can change the amount of freshly issued shares in the proposal by up to 50% till an updated DRHP is filed.

    Oyo pre-files DRHP with SebiETtech
    New Delhi: Oravel Stays, which operates the budget hospitality chain Oyo, on Friday filed a draft red herring prospectus (DRHP) under the confidential pre-filing route for an initial public offering of shares.

    Pre-filing, introduced by the Securities and Exchange Board of India in November last year, allows the details of the preliminary filing to be kept confidential, unlike in the normal filing where the DRHP becomes a public document. This option provides companies greater flexibility on the issue size during the initial stage, and they can change the amount of freshly issued shares in the proposal by up to 50% till an updated DRHP is filed.

    People close to the company said the issue size has likely been reduced to $400-600 million, consisting entirely of freshly issued shares with all the proceeds going to the firm. Oyo plans to repay most of its debt with the proceeds, they said. "For now, the company is hoping for an issue timing of around Diwali, once Sebi approves," said a person aware of Oyo's plans.

    ETD-1-01042023

    Oyo had first filed a DRHP with Sebi in September 2021 and was initially aiming to raise ₹8,430 crore, or more than $1 billion. In December last year, the market regulator asked it to update the DRHP. This after the company submitted its updated financial results for the first half of fiscal 2022-23 with its maiden adjusted operating profit, and said potential investors needed to be made aware of the material uptick in its performance.

    Oyo declined to comment on the pre-filing of DRHP.

    As per the provisions, the pre-filed DRHP can be used for interactions with qualified institutional buyers for limited marketing of an IPO.

    While companies must launch their IPOs within 12 months of Sebi's approval for their proposal or of making its final observations, under the confidential filing, an offer can be floated within 18 months from the date of the filing.

    Tata Play (formerly Tata Sky) was the first company in India to file a confidential DRHP with Sebi. In the US, companies such as Spotify, Lyft and Airbnb had opted for the confidential pre-filing route.

    "Filing through the confidential route will give Oyo some leeway on fine-tuning the issue size basis the market conditions to between $400 million and $600 million," said the person cited earlier, adding that the market continued to be "highly volatile" globally and, to a certain extent, in India as well.

    Oyo founder Ritesh Agarwal told employees in a town hall on Monday that the company could post adjusted earnings of nearly Rs 800 crore before interest, tax, depreciation and amortisation in the upcoming financial year 2024.



    ( Originally published on Mar 31, 2023 )

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    (What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2024 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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