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According to a report first published by Reuters, the Softbank-backed Indian hotel aggregator Oyo has submitted a private "pre-filing" document for what is anticipated to be a scaled-down Initial Public Offering (IPO). The company had submitted paperwork to go public in 2021 with an initial public offering (IPO) size target of 84.3 billion Indian rupees ($1.02 billion) but postponed the share sale at that time.
The source who spoke to Reuter reporters noted that the confidential filing option provides the firm freedom to adjust the amount of the issue until an updated file is made with the market regulator. Oyo is currently aiming for an IPO size of $400 million to $600 million.
Oyo is a hospitality company based in India that offers budget-friendly hotel accommodation to customers. Founded in 2013 by Ritesh Agarwal, Oyo has rapidly expanded its operations, and it now operates in over 800 cities globally, including India, China, the United States, and Europe. The company's business model involves partnering with budget hotels and guesthouses and then standardizing and upgrading their facilities to provide a consistent guest experience. Oyo has raised significant funding from investors, including SoftBank, and is considered one of the most valuable startups in India.
Despite its early success, Oyo has faced criticism over issues such as contract breaches and quality control, leading to some challenges in its expansion plans. Nonetheless, the company remains a major player in the budget hotel industry and has continued to receive funding from Softbank and other investors. The company has been in the news lately due to mass layoffs.
In the recent past, the market witnessed several leading tech startups’ valuations plummet. As a result, many Indian companies have postponed or abandoned their IPO ambitions on account of an unstable market. Some of these companies are jewellery store Joyalukkas, garment retailer Fabindia and skincare startup Mamaearth.
The Securities and Exchange Board of India (SEBI) established the secret pre-filing option last year in an effort to protect sensitive corporate information. Companies in India normally submit a draught prospectus to SEBI first which includes regulatory disclosures and is made available to the public for comments for at least 21 days. Afterward, a final prospectus is submitted for approval once again after considering any regulatory and other input.
Secretly pre-filing for an initial public offering (IPO) is a process in which a company starts preparing for an IPO without publicly disclosing their plans to do so. This process involves working with investment banks, lawyers, and auditors to prepare the necessary paperwork and financial statements required for an IPO. The goal is to have everything ready to go before publicly announcing the IPO, giving the company a better chance to control the narrative and avoid any negative speculation or rumours that may arise during the IPO process.
However, pre-filing for an IPO can be a delicate process, as it requires the company to balance the need for secrecy with the legal requirements for disclosure and transparency. Companies considering this approach should consult with experienced professionals to ensure they navigate the process correctly and legally.
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