Oyo to reduce planned initial offering amid tech headwinds
Oyo Hotels is reducing the shares it aims to sell via a stock-market debut by about two-thirds, an effort by its founder to get the sale done even after tech valuations plunged.
The once-high-flying company is preparing to file a fresh initial public offering document as soon as this week, said two people familiar with the matter, who asked not to be named discussing internal matters. In the filing, Oyo will outline plans to sell just a third of the new shares it originally planned, eroding the amount of fresh capital it is expected to receive, one of the people said.
The plan shows how founder Ritesh Agarwal, 29, is trying to push through an IPO even at weaker terms to alleviate the financial pressures on the hotel and lodging booking company and himself. While the travel market has improved from the pandemic-era trough, Oyo —
once valued around $10 billion as India’s Airbnb-equivalent — is still reporting mounting losses. Agarwal, meanwhile, took on billions of dollars of debt to boost his holding in the firm.
The situation remains fluid and Agarwal or Oyo may still fine-tune their targets. It’s the second attempt at an IPO by the SoftBank Group Corp.-backed startup, after India’s stock market regulator raised multiple red flags on its earlier try in late 2021. Since then, valuations of technology companies have declined after accelerating inflation and rising interest rates left customers with less to spend and raised concerns of a potential recession.
No shares will be offered for sale by Oyo’s current investors, the people said. SoftBank holds about half of the startup, which is formally called Oravel Stays Ltd. and also counts Airbnb Inc. among its backers.
Oyo didn’t immediately respond to emails, texts and calls seeking comment.
The company was targeting a valuation of about $9 billion and updated its IPO documents in early 2022, but SoftBank later that year reduced its estimate for Oyo to $2.7 billion. The IPO valuation will be finalized through a book-building process nearer to the listing but it’s set to be far from what the company originally envisaged.