New Delhi: Oyo, an indian startup that focuses on budget hotels, is currently in discussions with investors to secure additional funding. However, these talks may result in a significant decrease in Oyo’s valuation, potentially dropping to $3 billion or even lower according to some reports.
The company is actively engaging with investors, including Malaysia’s Khazanah, to explore this new funding round. Additionally, there’s a possibility of incorporating secondary transactions, which could lead to Oyo being valued as low as $2.5 billion.
In 2019, Oyo’s valuation reached $10 billion, but recent developments suggest a substantial revaluation. This potential valuation would fall below the total capital raised by Oyo through equity and debt over the years with its current market capital.
However, it’s important to recognize that these discussions are ongoing, and the terms of the deal could still undergo changes before finalization. SoftBank, a major investor in Oyo with over 40% ownership, had previously revised Oyo’s valuation downward to $2.7 billion in 2022. Oyo contested this adjustment, asserting there wasn’t a rational basis for it.
Oyo boasts support from investors like SoftBank, Airbnb, and others, they’ve refuted recent rumours regarding Oyo’s valuation, stating that there are no concrete plans for transactions or discussions about altering its value at this stage. This development comes on the heels of Oyo’s decision to withdraw its draft red herring prospectus for an initial public offering (IPO) for the second time. Initially aiming for an IPO in 2021 to raise around $1.2 billion at a $12 billion valuation, Oyo is currently awaiting regulatory approval from India’s market regulator, SEBI.
Despite these financial discussions, Oyo’s CEO recently informed employees that the company’s revenue for the fiscal year ending in March exceeded $682 million, suggesting continued operational growth amidst these financial deliberations.
