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Oravel Stays Pvt Ltd, that operates hospitality firm Oyo, has approved an increase in the authorised share capital of the company from Rs 1.17 crore to Rs 901 crore, according to a regulatory filing by the hospitality firm.

The development comes ahead of proposed initial public offering (IPO) by OYO, for which a draft red herring prospectus (DRHP) is likely to be filed in the next few months, sources in know of the matter told PTI.

An extraordinary general meeting of Oravel Stays Pvt Ltd (OYO), on September 1, approved the resolution to increase its authorised share capital, as per a Registrar of Companies (RoC) filing by the company.

Authorised capital is the maximum amount of capital that a company is allowed to issue at any point of time.

The increase in the authorised share capital of the company is from the existing Rs 1,17,80,010 to Rs 9,01,13, 59,300, the company said in a regulatory filing.

In a precursor to the IPO, OYO in August raised fresh capital from Microsoft at a post-money valuation of $9.6 billion.

Tech giant Microsoft Corporation has invested nearly $5 million in OYO through the issuance of equity shares and compulsory convertible cumulative preference shares on a private placement basis by the latter, the hospitality chain had said in a regulatory filing.

Earlier in July, it raised $660 million through the term B loan route from global institutional investors, including Fidelity Investments to refinance and simplify its existing borrowings.

OYO has initiated discussion with investment banks like JP Morgan, Citi and Kotak Mahindra Capital to manage its $1.5 billion public issue slated to raise between $1.2-1.5 billion at a valuation range of $14 to 16 billion, sources said.

Comments from the company could not be obtained at the time of filing the story.

The company has moved away from minimum guarantee (MG) model seen up until 2019, to a revenue sharing model, and has shifted to an automated and simplified twice a week dues reconciliation with its hotel partners.

OYO has earlier raised funding rounds from marquee global venture capital funds like Softbank, Sequoia, Lightspeed Venture Partners, Hero Corporate and leading global consumer tech companies like DiDi, Grab and Airbnb.