Oyo, the hospitality unicorn, has announced a significant change in its corporate strategy by withdrawing its recently proposed bonus share plan. This decision comes in the wake of criticism from shareholders and financial experts regarding the plan's complexity and potential bias towards certain investor groups.

Key Points of the Withdrawn Plan

The scrapped bonus share plan had proposed:

• One Compulsorily Convertible Preference Share (CCPS) for every 6,000 equity shares held
• Two conversion options:
  1. Class A (default): 1 CCPS converts to 1 equity share
  2. Class B (opt-in): 1 CCPS converts to 1,109 shares if merchant bankers are appointed for IPO

Criticism and Concerns

Financial expert Mohit Garg highlighted several issues with the original plan:

• Favored promoters and large investors
• Allowed control over milestone conditions by select groups
• Minimal benefits for retail shareholders

Oyo's Response and Future Plans

In response to the feedback, Oyo has:

1. Withdrawn the controversial 6,000:1 bonus share plan
2. Announced intentions to introduce a new, simplified bonus structure
3. Promised equal participation and transparency for all shareholders
4. Committed to bringing a fresh proposal for shareholder approval

Implications for Shareholders

The new approach by Oyo indicates:

• Increased focus on shareholder equality
• Removal of the application process for bonus shares
• Potential for a more straightforward and inclusive reward system

This move by Oyo demonstrates a willingness to listen to shareholder concerns and adapt its strategies accordingly. The company's decision to revise its bonus share structure may lead to improved investor relations and a more equitable distribution of benefits among all shareholders.

As Oyo prepares to introduce its new proposal, shareholders and market observers will be watching to see how the company balances its growth objectives with the interests of its diverse investor base.

Oyo, the hospitality technology platform, has announced an extension of the application deadline for its bonus issue, giving equity shareholders additional time to participate. The company has also made changes to simplify the application process, potentially paving the way for its upcoming initial public offering (IPO).

Key Updates on Oyo's Bonus Issue

Simplified Application Process

Oyo has streamlined the bonus issue application process by eliminating the need for shareholders to submit a Client Master List along with their election letters. This change is expected to make it easier for eligible shareholders to participate in the bonus issuance.

Conversion Options

Shareholders participating in the bonus issue have two conversion options to choose from:

1. Fixed Conversion: Each preference share will be converted into one equity share.
2. Milestone-linked Conversion: This option is tied to the appointment of bankers for a potential IPO during the current financial year.

IPO Plans

The company has revealed its intentions to file a Draft Red Herring Prospectus (DRHP) in November. Oyo is reportedly targeting a valuation of USD 7.00-8.00 billion for its initial public offering.

Implications for Shareholders

The extension of the application deadline provides eligible shareholders with additional time to consider their participation in the bonus issue. However, it's important to note that certain entities, including SoftBank Vision Fund and those associated with Ritesh Agarwal, are not eligible for this issuance.

The bonus issue structure, with its capped dilution of 5% of the total share capital on a fully diluted basis, aims to balance the interests of existing shareholders while preparing for potential public listing.

As Oyo moves closer to its planned IPO, these corporate actions signal the company's efforts to optimize its capital structure and enhance shareholder value. Investors and market watchers will be keenly observing how these developments influence Oyo's valuation and market position in the lead-up to its public offering.