Oyo in talks with Apollo for $660 million refinance as IPO gets delayed

6 Oct 2023 , 10:22 AM

According to people familiar with the situation, Oyo Hotels is in talks with Apollo Global Management to refinance a $660 million loan as the once-high-flying startup seeks additional time to reduce debt following a delay in its initial public offering.

Oravel Stays Pvt, Oyo’s parent company, is attempting to prolong maturity to five years from the current 2026 date, according to one of the persons who asked not to be identified because the negotiations are confidential. According to another source, a decision might be made as early as next month.

The talks with Apollo came after the Softbank Group Corp.-backed company declared its first annual profit, and Fitch Ratings expects earnings to improve as travel recovers. Oyo was the first Indian unicorn to obtain loans from foreign institutions, and it offered liberal terms and maintenance covenants at the time — a common tactic among startups regarded risky by investors.

Because of an ‘increase in profits,’ ‘we regularly get approached for cheaper financing options,’ but ‘the company’s board hasn’t approved anything, including prepaying some portion,’ an Oyo spokesman said in an email. 

The wait for Oyo’s IPO has proven to be lengthier than anticipated. According to the sources, the proceeds may have helped the lodging-booking company reduce its debt rather than seeking refinancing.

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