OYO speeds up IPO plans amid crucial debt repayment deadline
What's the story
OYO Hotels, a major player in the hospitality industry, is fast-tracking its IPO plans.
The strategic move comes as the company nears a crucial year-end debt repayment deadline.
Creditors, including Mizuho Financial Group Inc., are demanding that founder Ritesh Agarwal repay dues of $383 million loan if the start-up fails to go public by October.
The amount is part of a larger multibillion-dollar loan package tied to the company's IPO timeline.
Debt extension
Lenders may extend repayment deadline if IPO occurs this year
The lenders are looking for a clear picture of Agarwal's financial liquidity.
They have said they could push the repayment deadline to 2027, but only if OYO goes public this year.
In 2019, Agarwal also borrowed $2.2 billion with a guarantee from SoftBank Group Corp.'s chairman Masayoshi Son to increase his stake in OYO and gain more strategic control over the company he founded as a teenager.
Market debut
OYO's IPO discussions valued at up to $5 billion
Once a marquee investment for SoftBank, OYO has been eyeing a stock-market debut for years. The COVID-19 pandemic hit its growth story hard.
However, the company has now started talks with bankers for an IPO that could value the firm at as much as $5 billion.
Agarwal and SoftBank are OYO's largest shareholders with over 30% and more than 40% stakes, respectively.
Official statement
Agarwal's family office responds to IPO speculation
Responding to queries about OYO's IPO plans, Agarwal's family office said the decision will take into account the company's "strong net profits" for the fiscal year ending March 2024 and an "expected strong year" ending March 2025.
The office rejected speculations about financing arrangements and restructuring as incorrect.
It also denied claims about OYO's valuation being lower than secondary transactions they are aware of.