Prior to its forthcoming IPO, SoftBank reduces Oyo’s valuation to $2.7 billion

• ByStartupStory     |    September 23, 2022

In order to prepare for an initial public offering, SoftBank Group has reduced the value of Oyo Hotels by more than 20% on its books, according to sources familiar with the situation.

The people, who asked not to be identified because the information is private, said that the Japanese investor, the largest shareholder in the hotel booking company, reduced its estimated value for Oyo to $2.7 billion in the June quarter from an earlier $3.4 billion after benchmarking it against peers with similar operations. An investment round in 2019 valued the lodging company at $10 billion.

Following cost reductions and a rebound in travel, Oyo, formerly known as Oravel Stays, filed a fresh batch of financial paperwork with India’s market regulator on Monday as it prepared for a stock market debut. According to the persons, the business anticipates receiving approval from the Securities and Exchange Board of India (Sebi) for the public debut shortly and intends to enter the market with a valuation of approximately $5 billion early in the following year. Oyo hasn’t made up its mind about going public yet; depending on the market, its plans may alter.

According to preliminary discussions with prospective investors, the start-up was aiming for an IPO valuation of roughly $9 billion, according to a January article by Bloomberg News. The business stated in its initial filing from September of last year that it intended to generate $1 billion through the sale of both new and existing investor shares.

SoftBank’s spokesman did not immediately respond to a request for comment. Oyo stated that it was sure that its valuation shouldn’t have been reduced given its improving business performance but added that the timeframe of an IPO hadn’t been determined.

“We are certain that the valuation markdown speculations mentioned above are demonstrably false. “Business performance has an impact on valuation,” the startup said in a statement. The specific timetable of the IPO has not yet been determined, and its valuation is likewise rather speculative.

According to Oyo’s most recent disclosures, sales increased and losses shrank during the fiscal year that ended in March 2022 and the three months that followed. However, when macroeconomic uncertainties increased, investors all over the world sold off stocks, resulting in lower valuation multiples for tech businesses this year.

With comparisons to his support for WeWork and its quirky founder Adam Neumann, the company has been one of SoftBank founder Masayoshi Son’s most contentious startup bets. Son has long encouraged Oyo’s creator Ritesh Agarwal to expand quickly in countries like Japan and the US, which has had devastating results.

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