OYO parent PRISM may halve IPO fresh issue to Rs 3,350 crore

MUMBAI: OYO’s IPO plans could be checking into a smaller capital-raising room, with parent company PRISM considering cutting the fresh issue component of its proposed public offering by nearly half as improving cash generation reduces its need for new funds.

According to a PTI report, PRISM is considering reducing the fresh issue from its previously planned Rs 6,650 crore to Rs 3,350 crore. People familiar with the matter told PTI on Tuesday that the proposed change follows an improvement in the company’s cash generation and balance sheet, lowering its estimated requirement for fresh capital.

The rethink signals a possible shift in how the hospitality platform intends to fund its next phase of growth and manage its borrowings. Rather than raising the originally planned amount, PRISM intends to align the capital raised with its funding requirements while maintaining an efficient capital structure.

The company also plans to clear its remaining debt over the next two to three years using cash generated from its operations, according to a person familiar with the matter. The revised IPO proposal would continue to prioritise debt reduction, with the majority of the proceeds earmarked for the repayment or prepayment, either partly or fully, of certain borrowings.

PRISM had earlier planned to raise up to Rs 6,650 crore through the IPO, with approximately Rs 5,000 crore allocated towards debt repayment. The proposed fresh issue reduction to Rs 3,350 crore would significantly scale back the amount of new capital it seeks from investors, although the final structure remains subject to the company’s decisions and IPO process.

The development comes as PRISM advances towards the next stage of its public-market plans after filing its Updated Draft Red Herring Prospectus (UDRHP). The latest proposal suggests that the company’s fundraising requirements are being reassessed in light of its improving financial position.

For investors, the distinction between a fresh issue and an offer for sale is important. A fresh issue involves a company issuing new shares to raise capital, while an offer for sale allows existing shareholders to sell their holdings. The proposed change concerns the fresh issue component; the information provided does not specify whether any other element of the IPO structure will also be revised.

The proposed reduction also comes amid improving financial indicators and a more favourable credit outlook. Moody’s Ratings has changed PRISM’s outlook to positive from stable while retaining its B2 corporate family rating.

Moody’s expects OYO’s earnings before interest, taxes, depreciation and amortisation (EBITDA) to reach around Rs 3,000 crore over the next 12 to 18 months as the company expands its platform and adds more storefronts. The forecast points to further growth in operating earnings, although it remains an estimate rather than a reported result.

PRISM’s reported financial performance has already improved. For FY26, OYO’s EBITDA more than doubled to Rs 2,630 crore from Rs 1,080 crore in FY25. The increase provides financial context for the proposed reduction in fundraising, as stronger operating earnings can help a company generate more cash internally and rely less on fresh capital.

However, EBITDA is not the same as cash available to repay debt. Actual debt reduction will also depend on operating cash flows, investment requirements and other financial commitments. PRISM’s plan to clear its remaining borrowings over the next two to three years therefore remains an objective that will need to be assessed against its subsequent financial performance.

Founded in 2013 by Ritesh Agarwal, OYO is backed by SoftBank Group and operates in the hospitality sector through its accommodation platform. Agarwal holds a 30.52 per cent stake in the company, while SVF India Holdings (Cayman) Ltd, a subsidiary of SoftBank Group Corp, is its largest shareholder with a 40.04 per cent holding.

The proposed IPO adjustment comes at a point when PRISM is balancing its plans for public-market fundraising with efforts to strengthen its balance sheet. A smaller fresh issue could limit the amount of new capital brought into the company, but it would also reduce the funding available through that route for debt repayment and other requirements.

For now, the reduction remains under consideration rather than a confirmed change to the IPO. The final issue size and allocation of proceeds will determine how much capital PRISM raises from new shares and how far the offering contributes to its debt-reduction plans.

The broader message is that improved cash generation may be giving OYO’s parent greater flexibility over how much it needs to raise from investors. Whether that translates into a smaller IPO and a faster path to lower debt will depend on the final offer structure and the cash the business generates over the coming years.