HomeLatest NewsSoftBank slashes IPO-bound Oyo's valuation by $2.7 billion

SoftBank slashes IPO-bound Oyo’s valuation by $2.7 billion

SoftBank Group has cut the value of Oyo Hotels on its books by more than 20% as the high-flying startup prepares for an initial public offering, people familiar with the matter said.
The Japanese investor, the hotel booking firm’s largest shareholder, cut Oyo’s estimated value from $3.4 billion to $2.7 billion in the June quarter after benchmarking it against peers with similar operations, the people said, speaking on condition of anonymity. Because the information is not public. The lodging firm reached a valuation of $10 billion in a 2019 funding round.
Oyo, formally known as Oravel Stays, filed a fresh round of financial documents with India’s markets regulator on Monday as it plans a stock-market debut after cost-cutting and a recovery in travel helped pare losses.
The company expects approval from the Securities and Exchange Board of India for a public debut soon and aims to tap the market at a valuation of around $5 billion early next year, the people said. Talks about Oyo’s IPO are not final and its plans may still change depending on market conditions.
The startup was targeting a valuation of about $9 billion in its IPO after initial conversations with potential investors, Bloomberg News reported in January.
In its initial filing in September last year, the company said it planned to raise Rs 8,430 crore ($1 billion) through the sale of new shares and existing investors.
A SoftBank spokeswoman did not immediately comment. Oyo said it was confident that its valuation should not have been marked down given its recovering business performance, adding that it had not timed an IPO.
“We are convinced that the above assumptions about valuation markdowns are clearly wrong. The valuation is a result of business performance,” the startup said in a statement. “We have not determined the exact timing for the IPO and the IPO valuation is also highly speculative.”
The latest filings from Oyo show narrow losses and a rebound in sales for the year to March 2022 and the next three months. It reported a loss of Rs 1,890 crore for the year to March 2022, almost half of the previous 12 months.
But global investors have sold off stocks this year as macroeconomic risks mounted, attributing low valuation multiples to tech companies.
The company is one of SoftBank founder Masayoshi Son’s more controversial startup bets, paralleling his support of WeWork and its eccentric founder Adam Newman. Putra has supported Oyo founder Ritesh Agarwal for years and urged him to expand rapidly into markets like Japan and the US — with disastrous results.
As an investor in hundreds of private startups, SoftBank estimates the value of its holdings each quarter and then books the changes as a gain or loss on its income statement. It reported a record $23.4 billion loss in the June quarter due to portfolio valuation and foreign exchange losses.

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