SoftBank-backed OYO to shelve plans for public offering in 2022

MUMBAI: OYO Hotels, the once high-flying Indian startup, is shelving plans for an initial public offering (IPO) in 2022 after a market downturn that would hurt its valuation, according to people familiar with the matter.

The board of OYO, formally Oravel Stays Ltd, talked through a change in the offering’s timing during multiple meetings last week and earlier this week after consulting with its bankers and investors, said the people, asking not to be identified because the decisions are not yet public. If the company picks up the process again by year end, the earliest possibility for an IPO would be in 2023, they said.

The Gurgaon-headquartered company, which filed preliminary IPO documents last year, is seeking regulatory permission to update its draft prospectus with fresh financial information after the close of the September quarter, said the people. Its bankers, led by Kotak Investment Banking, have filed the request with the Securities and Exchange Board of India, the people said.

The decision could make OYO’s IPO a high-profile casualty from a global downturn in the technology industry. With inflation fears rising, lingering Covid-19 infections and the war in Ukraine, investors have roiled markets and pulled back from risky investments. The tech-heavy Nasdaq index has tumbled 26% this year.

“This isn’t the best of times for any IPO,” said Ashutosh Sharma, head of research, Forrester Research Inc. “Any startup anywhere in the world looking to raise money through IPO, VC funding or PE placement or any other channel, won’t get best valuation.”

An IPO delay would also mark another setback for OYO and founder Ritesh Agarwal, once celebrated for the vision of changing the hotel and lodging industry by backers such as SoftBank Group Corp. founder Masayoshi Son. SoftBank holds about 47% stake in the startup.