Shardul Amarchand Mangaldas & Co Advises Oravel Stays Limited on ₹6,650 Crore OYO IPO

Oravel Stays Limited, the parent company of OYO, has embarked on its third attempt to launch an Initial Public Offering (IPO) in India, proposing a ₹6,650 crore public issue. This significant move follows two previous withdrawals, highlighting the complexities and rigorous regulatory scrutiny involved in public listings. Shardul Amarchand Mangaldas & Co is advising Oravel Stays Limited on Indian law, while S&R Associates is acting as Indian legal counsel for the bankers. The IPO, structured as a fresh issue of equity shares, underscores the company's renewed strategy to raise capital for growth, navigating the stringent disclosure requirements of the Securities and Exchange Board of India (SEBI) (Issue of Capital and Disclosure Requirements) Regulations, 2018.

Oravel Stays Limited, the entity behind the prominent hospitality brand OYO, has once again set its sights on the Indian public markets, filing for a ₹6,650 crore Initial Public Offering (IPO). This marks the company's third attempt to go public, a journey characterised by previous withdrawals and strategic recalibrations. The latest filing, structured as a fresh issue of equity shares, signals a determined effort to secure capital for future growth and expansion, with the shares slated for listing on the BSE and NSE. The intricate process of bringing a company of OYO's scale to the public market necessitates robust legal guidance, a role being fulfilled by leading Indian law firms. Shardul Amarchand Mangaldas & Co is advising Oravel Stays Limited, providing crucial counsel on Indian law, while S&R Associates is representing the consortium of bankers involved in the public issue. This repeated pursuit of an IPO by OYO underscores the dynamic and often challenging landscape of capital markets in India, where regulatory compliance, investor sentiment, and corporate strategy must converge for a successful listing. For legal practitioners, OYO's journey offers valuable insights into the multifaceted legal and regulatory considerations inherent in high-stakes public offerings.

Initial Public Offerings in India are primarily governed by the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 (hereinafter referred to as "ICDR Regulations"). These regulations establish a comprehensive framework designed to ensure transparency, protect investor interests, and maintain the integrity of the capital markets. A cornerstone of this framework is the Draft Red Herring Prospectus (DRHP), a mandatory preliminary document that companies must file with SEBI before launching an IPO. The DRHP contains extensive disclosures about the issuer's business model, financial statements, risk factors, management details, and the proposed utilisation of the capital to be raised. SEBI reviews the DRHP, often issuing observations and requiring clarifications or revisions to ensure full compliance with the disclosure norms outlined in Schedule VI of the ICDR Regulations.

OYO's path to a public listing has been protracted. The company first filed its draft offer documents with SEBI in October 2021, proposing an IPO of ₹8,430 crore, which included both a fresh issue and an offer for sale (OFS) component. However, this application was returned by SEBI in January 2023, reportedly due to concerns regarding key performance indicators (KPIs), outstanding litigations, and valuation. OYO subsequently renewed its listing plans in March 2023 through the confidential pre-filing route, a mechanism that allows companies to engage with SEBI for initial feedback on their draft documents without immediate public disclosure. Despite this, the company withdrew its IPO papers for a second time in May 2024, with reports citing anticipated material changes in its financial statements as part of a refinancing plan and prevailing market volatility as key reasons. This history highlights the rigorous scrutiny applied by SEBI and the sensitivity of IPO plans to both internal corporate developments and external market conditions.

The latest iteration of OYO's IPO, proposing a ₹6,650 crore fresh issue, demonstrates a refined strategy and the critical role of legal counsel in navigating the complex regulatory landscape. Shardul Amarchand Mangaldas & Co, acting as Indian legal counsel for Oravel Stays Limited, is tasked with ensuring the issuer's compliance with the ICDR Regulations. Their responsibilities typically encompass conducting extensive legal due diligence on the company and its group entities, reviewing all material contracts, identifying and rectifying non-compliances, and meticulously drafting the non-business sections of the Draft Red Herring Prospectus (DRHP). This involves a deep dive into corporate governance, litigation history, and statutory filings to present a true and fair picture to potential investors and the regulator.

Conversely, S&R Associates, advising the bankers, plays an equally crucial role. Legal counsel for the book-running lead managers (BRLMs) is responsible for advising on regulatory compliance, verifying the accuracy and completeness of disclosures made in the offer document, and ensuring that the bankers fulfill their obligations under the SEBI (Merchant Bankers) Regulations, 1992, and the ICDR Regulations. The BRLMs, through their legal counsel, are primarily responsible for ensuring that the disclosures in the DRHP are true, correct, and proper, thereby safeguarding investor interests.

OYO's decision to pursue a fresh issue of equity shares, without an Offer for Sale (OFS) component, is a notable strategic shift. In previous attempts, there was an OFS component, which allows existing shareholders to sell their stakes. The current structure means that the entire proceeds from the IPO will flow directly into the company, earmarked for business growth and operational enhancements, rather than providing an exit route for existing investors. This signals a clear intent to strengthen the company's balance sheet and fund its future initiatives, a factor often viewed positively by investors.

The repeated withdrawals of OYO's IPO applications underscore the stringent requirements of the ICDR Regulations. SEBI's observations on previous filings, which reportedly included concerns about Key Performance Indicators (KPIs), outstanding litigations, and valuation, highlight the regulator's focus on comprehensive and accurate disclosures. The use of the confidential pre-filing route in December 2025 (and previously in March 2023) allowed OYO to engage with SEBI and refine its draft documents away from immediate public scrutiny, potentially addressing regulatory feedback before a public filing of the Updated Draft Red Herring Prospectus (UDRHP). This iterative process, guided by legal experts, is essential for navigating the intricate path to a successful public listing in India.

Oravel Stays Limited's third attempt at an IPO, backed by the expertise of Shardul Amarchand Mangaldas & Co and S&R Associates, exemplifies the rigorous and often iterative nature of public listings in India. For legal practitioners, this case highlights the indispensable role of specialized legal counsel in ensuring compliance with the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, from meticulous due diligence and DRHP drafting to navigating regulatory feedback and strategic structuring of the offering. The shift to a fresh issue-only structure underscores a strategic pivot aimed at directly bolstering the company's financial health and growth prospects, a move that requires careful legal articulation and justification.

As OYO moves closer to its potential listing, legal professionals will keenly observe the final stages of regulatory approval and market reception. The journey of OYO serves as a practical illustration of the complexities involved in taking a high-profile company public, where legal acumen is paramount in mitigating risks, ensuring transparency, and ultimately facilitating access to capital markets. The outcome of this IPO will not only be significant for OYO but will also provide further insights into SEBI's evolving regulatory approach and investor sentiment towards tech-driven hospitality businesses in India.