Oyo had been in talks with investors to raise a new round of funding at a 70 per cent lower valuation, as per a report by TechCrunch.
The hotel chain start-up is in talks with investors, including Khazanah, Malaysia's sovereign wealth fund. As per the report, there will be some secondary transactions as well that will reduce the company's value to around $2.5 billion. In 2019, Oyo was valued at $10 billion. The company's founder, Ritesh Agarwal, purchased $2 billion in shares from Sequoia Capital and Lightspeed Venture Partners, two venture capital firms.
As per the report, a valuation of $3 billion or less would be less than the total money that Oyo has raised over the years through debt and equity financing. The details of the new valuation and funding are still being discussed and could alter, or a round might not happen, according to the report.
This is not the first time that there have been talks about a reduction in valuation. After benchmarking Oyo Hotels against rivals with comparable operations, SoftBank reduced the worth of the hotel on its books by more than 20 per cent, to $2.7 billion from an earlier $3.4 billion. The company that owns the most shares in Oyo is SoftBank, which holds over 40 per cent of the hotel booking platform.
That time, Oyo commented that there was no rational basis for the markdown. The company said in a statement, “Valuation is an outcome of business performance. As per our latest audited results, we have clocked Rs 7 crore of maiden adjusted EBITDA profit in the June quarter, at 41 per cent gross profit margin and a 45 per cent increase in gross booking value per hotel per month vs. last financial year.”
Meanwhile, Oyo has denied talks of any valuation decrease. As per the report, a company spokesperson said, “Oyo continues to focus on better performance and higher earnings and engages with esteemed investors from time to time when approached, but there is no concrete transaction, let alone a valuation discussion at this stage.”
The company might also withdraw its IPO plans soon, as reported by the Economic Times. The report says that Oyo is completing preparations to remove the IPO documents from the Securities and Exchange Board of India (Sebi). The company first submitted a draft application for an IPO of more than $1 billion in October 2021. However, Oyo said that the information is not accurate.
